Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

The Rebound In Winnabego Is On

By (Thomas Hughes )Stock MarketsJun 23, 2022 01:26AM ET
The Rebound In Winnabego Is On
By (Thomas Hughes )   |  Jun 23, 2022 01:26AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Winnebago Is A Comfortable Way To Ride Out The Recession

Whether you believe a recession is coming is irrelevant, at least in the case of Winnebago Industries (NYSE:WGO). The company’s branding, quality, and industry trends have it on a path of outperformance that could easily last into the end of 2023.

The company’s FQ3 results were not just strong, but so far above the analyst's consensus figures, that it makes us wonder if they were paying attention.

We know the analysts are paying attention, BTW, because the RV industry has been one of the most closely watched since the pandemic began.

Unlike other pandemic winners, however, the trends unleashed by COVID-19 are not dependent on it so much as on human nature. People like to be outdoors and an RV is one heckuva way to do it with style.

And for Winnabego and the analysts? The 10 analysts rating the stock have it pegged at a Moderate Buy with a price target more than 65% above the most recent price action.

The consensus rating has been firm over the last 12 months while the price target peaked and moderated. The takeaway is the price target is steady versus last year and the Q3 results suggest to us it may begin moving higher again.

The very least we expect to see is a series of reiterated ratings confirming the long-term outlook. That outlook? For elevated business over the next few quarters, industry normalization, and sustained cash returns for shareholders.

Winnebago Levers Demand For Another Quarter Of Outperformance

Winnebago had a stellar quarter in which record revenues of $1.46 billion were logged. This figure includes nearly 900 basis points of acquisitional growth, however, but the organic 41% of YOY improvement is just as good.

The revenue also beat the consensus by more than 2,050 basis points and we expect to see this level of business or greater in Q4. On a segment basis, the Motorhome segment increased by 34% while Towables increased by 41%.

The newly acquired Marine segment came in at 8.6% of the net. In regard to market share, the company reports market share is up 70 basis points year-to-date to 13.2%.

Moving on to the margin, the gross margin improved by 100 basis points to 60.9% on the combination of sales leverage, pricing, and product mix offset by labor and input costs.

At the operating end, the margin improved by 150 basis points to 12.1% of sales which helped to drive robust gains on the bottom line. On the bottom line, revenue and margin strength resulted in adjusted EPS of $4.13 which not only rose 84% from last year but beat the consensus by $0.17.

The company did not give any formal guidance but the outlook remains strong. The backlog fell on a YOY basis, but a slim 2.7% to $3.6 billion which is worth nearly 2.5 quarters of business at the current pace.

While we see a peak in the RV business, we think normalization will leave the industry well above the pre-COVID levels and Winnabego with an elevated market share.

Deep Value Winnabego Moves Higher On Earnings Strength

Winnebago is a deep value, trading at only 3.75% of its earnings outlook and it is returning capital to shareholders. The stock yields a very safe 1.55% trading near $46 and there is a positive outlook for growth. The payout is only 5% of the earnings consensus, less than 5% of the actual results, there is a history of increases, and the balance sheet is net cash.

The company has also been using the cash flow to buy back shares and repurchased a record $70 million during Q3. That is worth 4.7% of the pre-release market cap and we expect to see this activity continue in Q4 if not beyond.

Turning to the chart, price action in Winnebago is up about 5.0% in premarket action and it may rocket higher after the open. Not only is the stock showing a technical bottom but it is also carrying a very high 20% short interest.

In this scenario, we see a short-covering rally underway with the possibility of a squeeze. Longer-term, we expect to see Winnebago trading in the range of $60 to $70.

WGO Stock Chart
WGO Stock Chart

Original Post

The Rebound In Winnabego Is On

Related Articles

The Rebound In Winnabego Is On

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email