The shares of recreational Vehicle manufacturer Winnebago Industries (NYSE:WGO) outperformed the broader S&P 500 index last Friday. The company’s better-than-expected quarterly earnings caused the stock to gain slightly in price. However, with relatively low profit margins and rising input costs, will WGO be able to thrive in the highly competitive RV market? Read more to find out.Recreational vehicle (RV) manufacturer Winnebago Industries, Inc. (WGO) in Forest City, Iowa, operates in six segments–Grand Design Towables; Winnebago Towables; Winnebago Motorhomes; Newmar motorhomes; Chris-Craft Marine; and Winnebago Specialty Vehicles. The demand for RVs rose substantially amid the COVID-19 pandemic as people sought alternative travel options with lower risks of contracting the virus. WGO CEO Michael Happe said in an interview that the pandemic accelerated WGO’s growth trajectory because the company was able to optimize retail pricing in a way it had not been able to do in a long time.
For its fiscal year 2022 first quarter, ended November 27, 2021, WGO’s revenues increased 45.7% year-over-year to a record $1.20 billion, surpassing the FactSet consensus estimate of $1.03 billion. This can be attributed to 37.5% organic growth, driven by strong consumer demand and pricing increases. Its gross profit came in at $229.40 million, up 67.4% from the year-ago value. Its net income improved 73.5% from the same period last year to $99.60 million. And its adjusted EPS stood at $3.51, reflecting a 97.2% rise from the prior-year quarter. And the company beat the Street’s EPS estimates by 50%.
Following the earnings release on December 17, shares of WGO gained 1.1% intraday to close Friday’s trading session at $68.41. WGO outperformed the broader S&P 500 index, which declined 0.6% intraday on Friday. Furthermore, the stock has gained 14.1% in price year-to-date.