$19.06
$87.70
bear $19.06
base $60.46
bull $87.70
margin of safety $33.00
market price* $64.37
Brunswick makes recreational boats and the engines, parts and electronics that go on them. In 2025 it had net sales of $5.36 billion. The Propulsion segment (Mercury Marine outboard, sterndrive and inboard engines, sold to more than 900 boat builders and a network of more than 9,000 dealers) had sales of $2.18 billion. Engine Parts & Accessories, which distributes parts and consumables to marine service shops in North America, Europe and Asia-Pacific, had $1.22 billion. Navico Group (marine electronics such as Simrad, plus power and switching components) had $0.80 billion. The Boat segment builds Boston Whaler, Sea Ray, Lund, Bayliner, Harris, Lowe, Crestliner and other brands. Boat demand is discretionary and cyclical, so earnings swing widely with the cycle. Parts and aftermarket sales, which run through the installed base of engines and boats, are steadier. How we measured earnings. We start from operating cash flow, remove the swings caused by working capital (inventory, receivables, payables and similar timing items), and subtract stock compensation and the portion of capital spending needed just to maintain the business. That gives owner earnings after interest. Because the company carries real debt, we then add back the cash interest it paid, value the business as if debt-free, and subtract net debt at the end. Results are on a continuing-operations basis, so the divested fitness business does not distort the comparison. Owner earnings per share were $2.19 in 2019, $4.47 in 2020, $7.10 in 2021, $7.34 in 2022, $6.41 in 2023, $5.35 in 2024 and $3.34 in 2025. Cash flow before interest was roughly $267 million, $429 million, $629 million, $647 million, $569 million, $501 million and $335 million over 2019 to 2025. Normal earning power. We used the median of 2019, 2020, 2023, 2024 and 2025, which spans a full cycle from the pre-pandemic year through the recent downturn. That is $429 million a year, or about $6.54 per share on 65.6 million diluted shares. We left out 2021 and 2022: pandemic-era boat demand and dealer restocking produced cash flow that has since reversed, and we do not treat it as normal. Including them would have lifted the anchor to about $501 million. We used today's share count because past buybacks (diluted shares fell from 90.1 million in 2017 to 65.6 million) were paid for with cash already spent and are reflected in today's debt. What is happening now. Cash flow before interest fell about 33% in 2025, from $501 million to $335 million. Gross margin fell 100 basis points, with tariffs alone costing 250 basis points, and the company recorded a $322.5 million non-cash write-down of Navico's goodwill and trade names. In the first half of 2026 (quarterly report filed August 5, 2026), sales rose about 10% to $2,936 million, operating earnings rose to $180 million from $160 million, and net earnings rose to $131 million from $80 million. On that evidence the base case assumes year one cash flow of $360 million (up about 7% from 2025's $335 million, against a trailing decline of 33%), $395 million in year two and the $429 million normal level from year three. We phase the recovery in rather than assume it, for two reasons. First-half operating cash flow was $249.7 million, below last year's $288.8 million even though earnings rose, and we could not tie that gap to specific working-capital items from the data reviewed. And if the first half is again about 57% of the year, as in 2025, 2026 operating earnings would land near $315 million, below the roughly $400 million earned in 2024 before write-downs. The base case therefore needs operating earnings to return toward 2024's level by about 2028. That is a return to a level already achieved with today's tariffs, not growth. Debt. At July 4, 2026 borrowings were about $2.12 billion against $288 million of cash. Notes: $400 million at 5.85% due March 2029, $550 million at 2.4% due August 2031, $450 million at 4.4% due September 2032, $200 million at 6.375% due 2049 and $215 million at 5.1% due 2052, plus short-term commercial paper ($290 million at year-end 2025; $295 million was classified as current in July). Because the 2031, 2032 and 2052 notes pay well below our 6% rate, we reduced the debt by about $134 million, the present value of that saving. We treated $150 million of cash as needed to run the business and credited the other $138 million. Net debt used is about $1,843 million. The nearest long-dated maturity is the $400 million of notes due March 2029; commercial paper is rolled continuously. Cash flow in every case is well above the interest bill. Cases (each runs continuously; nothing is credited unless it is in evidence).
Base: cash flow before interest of $360 million, $395 million, then $429 million a year for 30 years, after which we credit nothing. The evidence is the franchise's record: Mercury's engine business and parts distribution, and cash flow of $267 million or more in every year of the last seven. Business worth about $5,810 million; net debt $1,843 million; equity value about $3,966 million, or $60.46 per share.
Bear: cash flow falls back to $300 million and then $267 million (the weakest year of the window, 2019) and the business is credited for only 20 years. The reasons are named: the 2025 tariff cost, and the Navico write-down (Brunswick spent about $910 million on acquisitions in 2018, principally Navico, and $976 million of goodwill and indefinite-lived intangibles remain, with further write-downs possible). Since the add-back of non-cash charges is automatic, we carry this decay in the shorter life and lower level of the bear case rather than adjusting the earnings figure. Business worth about $3,094 million; net debt $1,843 million; equity value about $1,250 million, or $19.06 per share. Cash flow of $267 million comfortably covers interest of about $115 million a year (2025 cash interest paid).
Bull: the business repeats 2023, when it earned $569 million before interest at revenue of $6.4 billion: $400 million, $470 million, then $570 million a year for 30 years. Business worth about $7,597 million; net debt $1,843 million; equity value about $5,753 million, or $87.70 per share. What we left out. No revenue growth, share gains, price increases, electrification (Avator electric outboards), Fliteboard or Navico recovery beyond the normal level, because none is contracted or a demonstrated, repeatable process. Buybacks and dividends are not credited as growth either. Change from our earlier view. Our earlier estimates were $7.53 (bear), $42.20 (base) and $85.30 (bull). Those used a different earnings measure and discount rates of 8.5% to 10%. We now use a flat 6% discount rate and a cash-flow measure that excludes working-capital swings, then subtract debt. All three values are therefore higher, mainly because of the method and not because the company improved. The operating news is mixed: tariffs, the Navico write-down and lower 2025 cash flow are negatives, while the first-half 2026 rebound is a positive, and we credit only part of it. What would make this wrong. If operating earnings stay near $315 million after 2026 and tariffs remain, cash flow may settle nearer the bear level. The shares would be worth more than the base case only if boat demand and margins recover to 2023 levels, which the recent results do not yet show.