BRP’s Strategic Pivot to Powersports & Innovation: A Bullish Case for FY2026 Growth

In an era of sector-wide turbulence, BRP Inc. (TSX: DOO; NASDAQ: DOOO) has positioned itself as a leader through strategic divestitures, design-driven innovation, and shareholder-centric policies. The company’s Q1 FY2026 earnings call and shareholder meeting, held on May 29, 2025, underscored its resolve to capitalize on core strengths while navigating headwinds like tariff volatility and industry slowdowns. For investors seeking exposure to a reinvigorated outdoor recreation sector, BRP’s moves now present a compelling opportunity.

Strategic Portfolio Optimization: Focusing on High-Growth Segments

BRP’s decision to divest its Marine business—a move finalized in Q1 FY2026—marks a pivotal shift toward its core Powersports and OEM Engine divisions. By shedding underperforming assets (excluding high-margin Sea-Doo personal watercraft and Switch pontoons), BRP is channeling resources into segments with stronger growth trajectories. This strategic realignment aligns with its $8.6–$8.9 billion FY2026 revenue guidance, which prioritizes margin expansion over volume at any cost.

The Marine divestiture also reduces exposure to sector-wide declines in seasonal products, where retail sales fell 30% in FY2025. Instead, BRP is doubling down on Year-Round Products like the Can-Am SSV and ATV, which saw retail growth in the low-teens. These vehicles cater to a resilient customer base (e.g., off-road enthusiasts, hunters, and contractors) less sensitive to macroeconomic headwinds.

Design-Driven Innovation: A Catalyst for Market Share Gains

BRP’s recent win as the Red Dot Design Team of the Year 2025 is no accident. The company’s product pipeline brims with next-gen offerings, such as the Can-Am Outlander 1000R, featuring a 10.25-inch touchscreen and 101 horsepower engine, and the Sea-Doo FishPro Apex, a high-performance PWC with Garmin fish-finding technology. These designs reflect BRP’s focus on niche, high-margin markets (e.g., fishing enthusiasts, adventure travelers) where competition is weaker.

The Palm Bay Design & Innovation Center, bolstered by a $15M investment, is now accelerating the development of electric and low-emission models—a critical move to meet evolving regulatory standards and consumer demand. With electric ATV/SUV prototypes in testing, BRP is positioning itself as a sustainability leader in a sector increasingly scrutinized for environmental impact.

Tariff Risks Mitigated, but Sector Challenges Remain

While tariffs on Chinese imports (e.g., components for marine engines) have historically pressured margins, BRP’s divestiture of Marine operations reduces exposure to this risk. The company’s reliance on North American suppliers and its vertical integration in engine production (Rotax brand) further insulate it from supply chain volatility.

However, the broader Powersports industry faces retail sales declines (e.g., -18% in Q2 FY2025), driven by high-interest rates and inflation. BRP’s solution? Aggressive price incentives and product differentiation. The Can-Am Maverick R Max, with its premium features and 10.25-inch touchscreen, commands a 20% price premium over competitors—a testament to brand loyalty and design excellence.

Shareholder-Friendly Policies Signal Confidence

BRP’s $0.21 dividend per share, payable in July 2024, reflects management’s commitment to returning capital amid uncertainty. The shareholder meeting’s virtual format—featuring real-time voting and live Q&A—demonstrates transparency and accessibility, fostering trust in governance. With $1.66B in operating cash flow (FY2024), BRP has ample liquidity to fund innovation while rewarding investors.

Why Invest Now?

• Sector Leadership: BRP’s design acumen and product pipeline outpace peers in niche, high-margin markets.
• Strategic Divestitures: Reduced exposure to declining segments, channeling capital into growth areas.
• Sustainability Edge: Early mover in electrification and low-emission tech.
• Dividend Certainty: Steady payouts amid a volatile industry.

Risks to Monitor

• Global Economic Downturn: Continued inflation could curb discretionary spending.
• Regulatory Scrutiny: Stricter emissions standards may require accelerated R&D spending.

Final Analysis: A Buy for Growth Investors

BRP’s FY2026 trajectory is clear: a leaner, focused firm capitalizing on its design prowess and Powersports dominance. With a P/E ratio of 18.5 (vs. industry average 22.3) and $3.7B market cap, the stock offers upside potential as it executes its turnaround. Investors seeking exposure to outdoor recreation’s future—and a dividend-paying stock with growth legs—should act swiftly.

In a sector rife with uncertainty, BRP’s blend of strategic discipline and innovation makes it a standout play for FY2026 and beyond.