DOO

We rate BRP Inc. (DOO) as a Buy with a composite score of 73.4/100 at a current price of $79.49. The stock scores above average across the majority of our six quantitative factors and ranks #30 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in quality (84th percentile) and value (78th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (46/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

BRP Inc. holds an above-average position (#16 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 73.4/100 places it at rank #30 in our full 7,333-stock universe. At $3.6B in market capitalization, BRP Inc. is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (78th percentile), revenue contraction of -27% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 23% (-19.8pp vs sector) narrow to operating margins of 7% (+5.8pp vs sector) and net margins of -2.7%, yielding a gross-to-net conversion rate of -12%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $79.49, BRP Inc. appears undervalued relative to its fundamentals. Our value factor score of 78/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at EV/EBITDA of 3.7x (discounted to peers), P/S of 0.3x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to BRP Inc.. The stock presents a balanced risk profile: current negative profitability (net margin -2.7%). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: current negative profitability (net margin -2.7%). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 74th percentile and quality factor at the 84th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (74th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate BRP Inc.'s capital allocation as Poor. Key concerns include negative profitability, weak asset returns (ROA -13.5%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — BRP Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, BRP Inc. receives a Buy rating with a composite score of 73.4/100 (rank #30 of 7,333). Our quantitative framework assigns a Narrow Moat (46/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 74/100.

Our analysis supports a constructive view on BRP Inc.. The combination of identifiable competitive advantages, medium uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.