By Zacks Equity Research

Brunswick Corp. (BC) will be going for its eighth straight quarter with a positive earnings surprise when it reports later this month. 

Over the past seven quarters, this manufacturer of recreational and lifestyle products has an average beat of more than 130%. The company surprised by more than 120% in its third quarter.

This Zacks No. 1 Rank ("strong buy") reached its 52-week high of $31.99 on Jan. 4. The diligent execution of its operating strategy and its long-term earnings growth potential of 12.3% are just a couple of factors that make it a solid momentum pick.

Solid third-quarter earnings beat

On Oct. 25, Brunswick reported third-quarter adjusted earnings of 43 cents per share, which trounced the Zacks Consensus Estimate by 126.32% and the prior year's earnings by 30.3%.

Net sales of $884.8 million increased 1.0% year over year, thanks in large part to strong revenue growth from the Engine segment.

Gross margins expanded 310 basis points over the prior-year quarter to 55.9%, while operating profit increased 35% to $65.7 million. Gross margins were driven by top-line growth and lower cost of goods sold.

Brunswick raised the lower end of its earnings guidance for full year 2012 and now expects between $1.65 and $1.75 per share. The previous outlook was for $1.60 to $1.75.

The company is scheduled to report its fourth-quarter earnings on Jan. 24. The Zacks Consensus Estimate is currently at a loss of 9 cents per share, suggesting a year-over-year improvement of 71.7%.

Earnings momentum on the rise

The Zacks consensus estimate for 2012 has risen 0.6% to $1.74 per share over the last 30 days, representing a year-over-year increase of 48.4%. For 2013, the Zacks consensus estimate is up 1.8% to $2.24 over the same time frame, suggesting a year-over-year improvement of 29.2%.

Brunswick currently trades at a forward price-to-earnings multiple of 13.8, a 6.1% discount to the peer group average. In addition, it has a trailing 12-month return on equity of 123.1%, which is above its peer group average of 29.2%.

On a price-to-book basis, Brunswick trades at 14.88 times, a 321.5% premium to the peer group average.

The stock is currently trading above its 50- and 200-day moving averages, which stand at $26.42 and $23.94, respectively. In fact, the stock has been consistently trading above its 50-day and 200-day moving averages since Oct. 31, 2012.

Volume averages roughly 961,000 daily. The 52-week return for the stock is 69.03%, compared to the S&P's 14.1%.

Brunswick Corp. is best known for making bowling and billiard equipment. However, it has evolved into a much more diverse company with high power brands across several industries; from Life Fitness and Hammer-strength in its fitness division to some of the top names in marine boating like Bayliner, SeaRay, Cabo Yackts and more. Brunswick also manufactures marine engines and accessories under Mercury, Mariner, and other brands. The company has a market cap of $2.81 billion. Other Zacks Rank No. 1 ("strong buy") stocks from the same sector include Marine Products Corp. (MPX).

More from Zacks

• This article on Zacks.com
• Analyst report on BC