BRP, a prominent player in recreational vehicles such as snowmobiles, quads, leisure boats, and jet skis, as well as the owner of renowned brands like Can-Am, Ski-Doo, and Manitou, has witnessed impressive growth over the past decade. They tripled their sales from 2013 to 2023, accumulating $3.4 billion in profits, which they largely returned to shareholders through share buybacks at attractive valuations (around 6-7 times EBITDA and 10 times earnings).
 
Despite this remarkable expansion, with earnings per share soaring from less than $1 at the beginning of the decade (fiscal years 2012-2013) to $10 over the last two fiscal years (2022-2023), the company's share price hovers around $100, which appears to be a multiple of around 10 times earnings. This valuation may seem inconsistent with a rapidly growing company.
 
Two factors contribute to this discrepancy. Firstly, there's concern about a potential drop in demand due to rising interest rates after a decade of low rates, during which Canadian households accumulated significant debt to fund discretionary consumer purchases.
 
Secondly, there's the possibility that the last two years, marked by the post-pandemic outdoor enthusiasm following two years of confinement, were extraordinary, and a less optimistic future may be ahead.
 
However, BRP's recently published half-year results for fiscal year 2024 paint a different picture. Sales surged by 22.6% in the first half compared to the same period last year, with earnings per share following a similar trajectory. BRP maintains its status as a global leader in its industry, known for its strong management and solid position in Canada and North America. This situation warrants close attention.