Narrow-Moat Malibu Shares’ 40%-Plus Discount Offer Compelling Entry Point for Investors

Amid concerns about inflation and the global geopolitical environment, Malibu's stock price struggled to stabilize in 2022, sliding 22% over the calendar year. Even with a high-single-digit price gain year-to-date through Jan. 20, Malibu still trades at a more than 40% discount to our $100 fair value estimate. We contend that the market is overweighting the magnitude of impact of inflationary risks on consumer demand. In our opinion, these issues have led Malibu's trailing 12-month P/E multiple to contract from its five-year historical average of 13.5 times to 6.4 times at end of calendar year. This is versus our five-year double-digit EPS growth outlook (11%). Furthermore, with the enterprise value/trailing 12-month EBITDA (4.3 times) trading at a more than 50% discount to the five-year historical average (8.7 times), we think Malibu shares provide an attractive point of entry.