Premium Outdoor Experiences And Electrification Trends Will Expand Global Markets

Key Takeaways

• Innovative product launches and international expansion, especially in fast-growing regions, are poised to accelerate growth and diversify revenue streams.
  
• Strategic network optimization and digital initiatives support margin recovery and higher recurring revenue, positioning the company for stronger, sustained earnings.
  
• Structural industry shifts, regulatory and economic headwinds, demographic shifts, and high innovation risk all threaten BRP's long-term market demand, profitability, and earnings stability.

Catalysts

Designs, develops, manufactures, and sells powersports vehicles and marine products in the Mexico, Canada, Austria, the United States, Finland, Australia, and Germany.

• Analyst consensus expects inventory normalization and new product launches to realign wholesale and retail, but with BRP's dealer inventories now below pre-COVID levels and market share in key segments already surging, there is potential for a faster-than-anticipated volume and revenue rebound as channel restocking accelerates, especially given strong order books for core products heading into 2026.
  
• While analysts highlight cost savings and margin recovery, ongoing network optimization and the company's proven ability to mitigate tariff headwinds through agile sourcing and localized manufacturing could allow normalized EBITDA margins to surpass pre-COVID peaks, directly driving stronger earnings growth than consensus expects.
  
• The launch cadence and breadth of innovative products-especially in EV powersports and connected, higher-ASP models-positions BRP to capture disproportionate share of shifting consumer demand toward premium, experiential outdoor activities among younger demographics, leading to both higher sales volume and sustainably higher average selling prices.
  
• Expansion across international markets, particularly with high-growth in Latin America and increasing traction in Asia Pacific, is underappreciated as a catalyst that could materially diversify and accelerate top-line growth, reducing reliance on slower markets in North America and insulating the business against regional economic headwinds.
  
• BRP's increasing emphasis on digital direct-to-consumer channels, aftermarket solutions, and connected ecosystems is set to substantially lift customer retention, accessory attachment rates, and high-margin recurring revenue streams, which should drive structurally higher net margins over the medium to long term.

BRP Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on BRP compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming BRP's revenue will grow by 9.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 2.6% today to 7.0% in 3 years time.
• The bullish analysts expect earnings to reach CA$715.9 million (and earnings per share of CA$10.26) by about September 2028, up from CA$197.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 14.3x on those 2028 earnings, down from 33.4x today. This future PE is lower than the current PE for the CA Leisure industry at 25.7x.
• Analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.17%, as per the Simply Wall St company report.

BRP Future Earnings Per Share Growth

Risks

• Long-term shifts toward urbanization, experiences over ownership, and a growing sharing economy all threaten the size of BRP's core market for recreational vehicles, suggesting that long-term revenue growth may be structurally constrained even if product launches are successful.
  
• Increasing regulatory scrutiny and the introduction of tariffs, emissions restrictions, and pricing uncertainty in major regions like North America and Europe could significantly increase costs and compress margins, as highlighted by the $90 million annual gross tariff headwind and the risk of further escalations impacting both revenue and net earnings.
  
• BRP remains heavily exposed to economic conditions, as demand for its products is tied to discretionary spending; ongoing macroeconomic uncertainty, high financing rates, and consumer confidence issues, especially in the US market, pose ongoing risks of revenue and earnings volatility during downturns.
  
• Heavy investment in innovation, electrification, and the capital-intensive nature of operations create execution risk; if new launches like the electric Outlander and Can-Am Defender fail to achieve commercial success or adoption remains slow (as noted in electric motorcycle sales), the company's margins and return on invested capital could decline meaningfully, negatively affecting profitability and EPS over time.
  
• Demographic trends, including an aging population and waning interest in powersports among younger generations, combined with intensified competition and supply chain volatility, suggest that both industry demand and BRP's market share may decline, putting long-term pressure on revenue growth, gross margins, and ultimately sustained earnings power.

Valuation

• The assumed bullish price target for BRP is CA$114.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of BRP's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$114.0, and the most bearish reporting a price target of just CA$71.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be CA$10.3 billion, earnings will come to CA$715.9 million, and it would be trading on a PE ratio of 14.3x, assuming you use a discount rate of 7.2%.
• Given the current share price of CA$90.43, the bullish analyst price target of CA$114.0 is 20.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.