BRP (DOO:TSE) Fundamental Valuation Report

Fundamental Valuation Report


Consumer Cyclical:Recreational Vehicles

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Close Price/Date
$36.27 (CAD) 27/03/2019

Weighted Valuation
$48.65 (CAD)

Overall Rating
Undervalued by 34.1%

Valuation Models Analyst Consensus: $56.75 (CAD)
(in order of importance) Discounted Cash Flow: $32.47 (CAD)
Comparables: $56.69 (CAD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (DOO:TSE CAD)

Price 36.27
Range 35.33 – 36.45
52 week 33.25 – 71.11
Open 35.97
Vol / Avg. 516315/269608
Mkt cap 3.52B
P/E 15.91
Div/yield 0.36/0.01
EPS 2.28
Shares 97.14M
Beta 1.52

Company Description

BRP Inc designs, develops, manufactures, distributes, and markets snowmobiles, all-terrain vehicles, and personal watercraft under the Ski-Doo, Sea-Doo, Can-Am, and Lynx brand names. It also builds engines under the Evinrude (outboard) and Rotax brands and offers parts, accessories, and clothing that cater to its core consumers. In 2018, the company created a new marine group, acquiring boat manufacturers Alumacraft and Triton, which makes Manitou pontoon boats. The company markets its products through a network of more than 3,600 independent dealers and 185 distributors across more than 100 countries.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for DOO:TSE

Using a discounted cash flow model we generated an intrinsic value of $32.47 (CAD) for DOO:TSE

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

DOO:TSE Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $32.47 1% 5% 1% 5%
WACC (or Ke) 11.23 $38.63 $27.66
Terminal Growth Rate 3.00 $28.33 $37.76
Tax Rate 0.31 $36.06 $28.88
Cash Flow 762,142,438 $29.47 $35.47
Capital Expenditures -201,260,000 $31.74 $33.20
Long Term Debt 990,400,000 $32.98 $31.96

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $56.69 (CAD) for DOO:TSE. We also generated a valuation of $48.80 (CAD) using other metrics and comparables.
The comparable companies were Camping World Holdings (CWH:NYS), Fox Factory Holding (FOXF:NAS), Harley-Davidson (HOG:NYS), LCI Industries (LCII:NYS) and Polaris Industries (PII:NYS).

Company DOO:TSE End Date Value
Earnings/Share $2.28 (CAD)
Book Value/Share ($3.98) (CAD)
Sales/Share $49.52 (CAD)
Cash Flow/Share $6.25 (CAD)
EBITDA/Share $5.70 (CAD)
Price Based on Comps Adjustment Factor (%)
$49.78 (CAD) 35.3
$0.00 (CAD) 0.0
$68.37 (CAD) -25.4
$80.80 (CAD) -44.2
$71.04 (CAD) -3.9
16.15 PE Ratio 21.83 37.94 29.34 11.64 13.98 16.27
0.00 PB Ratio 6.57 13.14 7.50 3.34 2.87 5.99
0.80 PS Ratio 1.38 0.10 3.99 1.08 0.84 0.90
6.30 PCF Ratio 14.88 6.85 37.76 5.13 13.25 11.42
8.04 EV to EBITDA 12.46 6.68 24.39 12.53 8.65 10.04


Using a multiples approach we generated a valuation of  $56.10 (CAD) for DOO:TSE

Company DOO:TSE End Date Value
Earnings/Share $2.28 (CAD)
Book Value/Share ($3.98) (CAD)
Sales/Share $49.52 (CAD)
Cash Flow/Share $6.25 (CAD)
EBITDA/Share $5.70 (CAD)
Price Based on Comps Adjustment Factor
$65.87 (CAD) 0
$0.00 (CAD) 0
$43.59 (CAD) 0
$52.30 (CAD) 0
$62.62 (CAD) 0
Ratios Ratio Average
PE Ratio 28.89
PB Ratio 37.05
PS Ratio 0.88
PCF Ratio 8.37
EV to EBITDA 10.98

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  DOO:TSE for the last 2 years was  37.05

We ran the Adjusted Book Value for  DOO:TSE and generated a book value of  ($3.38) (CAD)
By multiplying these we get an adjusted valuation of  ($125.11) (CAD)

Analyst Data

In the Stockcalc database there are 8 analysts that provide a valuation for DOO:TSE. The 8 analysts have a concensus valuation for DOO:TSE for 2019 of $56.75 (CAD).


Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
6 2 0 4.3333 Outperform 2019-3-26

Current Price: 36.27 CAD

Analyst Consensus
CAD Millions 2020 2021
Mean EPS 3.91 4.63
# EPS Analysts 9 1
Mean Revenue 5,903.30 6,607.00
# Revenue Analysts 9 1
Mean Target Price
Mean Cash Flow 6.73 7.51
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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