Recreational vehicle (RV) manufacturer Winnebago Industries (NYSE:WGO) shares have been selling off with the benchmark indices and continues to sell-off despite the market rebound.
The iconic maker of campers and RVs has enjoyed a resurgence of demand fueled by pandemic lockdowns that caused consumers to discover outdoor leisure and lifestyles. The advent of remote work also inspired many workers to transform their RVs into mobile offices as they maintain engagement through virtual meetings.
The new normal continues to inspire a new generation of elastic office and flexible workers. While rising fuel prices, supply chain disruptions, and interest rate hikes may hamper near-term growth.
The Company is still growing at a double digit clip while its shares are selling at a bargain 4.3X earnings. Prudent investors seeking a value play in the RV segment can watch for opportunistic pullbacks in shares of Winnebago.
Q2 Fiscal 2022 Earnings Release
On Mar. 23, 2022, Winnebago released its fiscal second-quarter 2022 results for the quarter ending February 2022. The Company reported a profit of $3.14 per share beating consensus analyst estimates for $2.91 per share by $0.23 per share.
Revenues rose 38.7% year-over-year (YoY) to $1.16 billion beating consensus analyst estimates for $1.1 billion. Gross profit margin was 18.1% thanks to pricing ahead of telegraphed cost input inflation to offset supply chain constraints and production inefficiencies. The Company continued to gain RV market share by 100 bps to 14.3%.
Winnebago CEO Michael Happe commented,
"…Our second quarter performance and record sales results at recent RV and Marine trade shows further validate consumers’ embrace of the outdoor lifestyle. Winnebago Industries is capitalizing on that sustained demand – market share gains across our segments are evidence of deep affinity for our brands, which consumers recognize are differentiated due to our continued focus on quality, service, and innovation. As of January 2022, our RV retail market share is 14.3% on a trailing three-month basis, reflecting an increase of 1.0 share point over the same period last year."
Conference Call Takeaways
CEO Happe emphasized that consumer demand is still strong and robust and outlined specific areas of growth. The towable RV segment grew 47.2% YoY to $646.6 million driven by pricing increases in addition to 13.2% unit growth. The motorhome segment grew 9.1% YoY to 417.6 million, but EBITDA fell (-9.6%) driven by production inefficiencies as a result of supply chain disruptions.
Its marine segment revenues were $97.3 million with adjust EBITDA of $13 million, up $11.9 million from prior year with a backlog of $277.9 million. The Barletta Pontoon Boat business was acquired last August and helped generate 9% of growth as it gains market share.
CEO Happe stated that the Winnebago brand clearly recognize the differentiation with its products. He stated,
"This differentiation is a result of our relentless focus on our golden threads of quality, service, and innovation. Robust consumer demand is a powerful undercurrent that we believe will continue to propel our company's growth through the current fiscal year and beyond."
He noted that 51% of new RV-ers in both 2020 and 2021 embarked on the endeavor mainly due to COVID reasons. Winnebago has benefitted and is confident that these interest trends are becoming ingrained as customer continue to pursue their love for the outdoors.
A study showed a 16% YoY increase in households camping through November 2021. He also pointed out that flexible work is driving new RV-ers as 25% of millennials and 27% of Gen-X-ers claim they use their RVs as a place to stay while working as a reason for purchasing one.
WGO Opportunistic Price Levels
Using the rifle charts on the weekly and daily time frames provides a broader view of the landscape for WGO stock. The weekly rifle chart formed an inverse pup breakdown that bottomed near the $51.79 Fibonacci (fib) level. The weekly 200-period moving average (MA) support sits at $51.59. The weekly 5-period MA continues to fall at $57.92 followed by the 15-period MA at $64.79 and 50-period MA at $69.47.
The weekly lower Bollinger® Bands (BBs) sit at $48.41. The daily rifle chart also formed an inverse pup breakdown with a falling 5-period MA resistance at $54.30 followed by the 15-period MA at $57.06. The daily 50-period MA is falling at $61.98. The daily stochastic is attempting to form a mini pup at the 20-band and can trigger the daily market structure low (MSL) buy signal on a breakout through $56.94.
Prudent investors can watch for opportunistic pullbacks at the $51.79 fib, $50.52, $49.16 fib, $47.85 fib, $45.56, $42.57, $41.25 fib, $38.88 fib, and the $36.61 fib level. Upside trajectories range from the $60.70 fib level up towards the $71.29 fib level.