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MSFT   275.23 (-0.42%)
META   200.68 (-1.06%)
GOOGL   101.03 (-1.40%)
AMZN   97.24 (-0.82%)
TSLA   189.19 (-1.37%)
NVDA   264.10 (-0.46%)
NIO   9.20 (+3.02%)
BABA   98.40 (+14.26%)
AMD   94.56 (-2.12%)
T   18.72 (-0.79%)
F   11.60 (+0.69%)
MU   59.28 (-0.85%)
CGC   1.81 (-3.72%)
GE   93.14 (-0.18%)
DIS   94.82 (-0.84%)
AMC   5.15 (+13.19%)
PYPL   72.70 (-0.82%)
PFE   39.99 (-0.57%)
NFLX   323.52 (-1.26%)
QQQ   307.12 (-0.53%)
AAPL   157.65 (-0.40%)
MSFT   275.23 (-0.42%)
META   200.68 (-1.06%)
GOOGL   101.03 (-1.40%)
AMZN   97.24 (-0.82%)
TSLA   189.19 (-1.37%)
NVDA   264.10 (-0.46%)
NIO   9.20 (+3.02%)
BABA   98.40 (+14.26%)
AMD   94.56 (-2.12%)
T   18.72 (-0.79%)
F   11.60 (+0.69%)
MU   59.28 (-0.85%)
CGC   1.81 (-3.72%)
GE   93.14 (-0.18%)
DIS   94.82 (-0.84%)
AMC   5.15 (+13.19%)
PYPL   72.70 (-0.82%)
PFE   39.99 (-0.57%)
NFLX   323.52 (-1.26%)
QQQ   307.12 (-0.53%)
AAPL   157.65 (-0.40%)
MSFT   275.23 (-0.42%)
META   200.68 (-1.06%)
GOOGL   101.03 (-1.40%)
AMZN   97.24 (-0.82%)
TSLA   189.19 (-1.37%)
NVDA   264.10 (-0.46%)
NIO   9.20 (+3.02%)
BABA   98.40 (+14.26%)
AMD   94.56 (-2.12%)
T   18.72 (-0.79%)
F   11.60 (+0.69%)
MU   59.28 (-0.85%)
CGC   1.81 (-3.72%)
GE   93.14 (-0.18%)
DIS   94.82 (-0.84%)
AMC   5.15 (+13.19%)
PYPL   72.70 (-0.82%)
PFE   39.99 (-0.57%)
NFLX   323.52 (-1.26%)

Is it Time to Take a Ride with Winnebago Stock?

Key Points

  • Concerns about a post-pandemic drop-off are not showing up in the company's financials. 
  • A backlog in marine sales suggests strength will continue for at least a couple of quarters. 
  • Winnebago is trading at an attractive valuation. 
  • 5 stocks we like better than Winnebago Industries
Is it Time to Take a Ride with Winnebago Stock?

Winnebago Industries (NYSE:WGO) reported earnings on October 19 and delivered a beat on both its top and bottom lines. The company posted earnings per share (EPS) of $3.02 on revenue of $1.18 billion. That was above the $2.97 EPS on revenue of $1.11 billion that was forecast.  

Those numbers were also stronger on a year-over-year (YOY) basis. Earnings were up 17% from the prior year and revenue was up 13%.  

But you wouldn’t know that by looking at the WGO stock price which is down over 11% in mid-morning trading. The stock had been climbing higher recently so this may be a case of investors deciding to take some profits in this bear market rally. Plus, short interest in the stock is above 18%.  

That may make Winnebago stock unappealing for traders. But if you’re an investor with a long-term outlook, this article will look at whether there is value in buying Winnebago stock. 

Demand Remains Strong 

One concern about Winnebago and other companies in the recreational vehicle (RV) space was that demand would trail off. RVs are long-term purchases so once people have their RV, they won’t be back in the market for a long time. There was also some sentiment that consumers would switch to different forms of transportation as pandemic restrictions eased.  

But the company's earnings report tells a different story. Winnebago reported a 24% revenue increase in its motorhome division, and this was even as the company is raising prices. The company’s marine division is also showing strength with a 42% rise in sales. And the company says that there is still a high backlog for marine products. That bodes well as we enter the time when consumers began to think about next summer.  


To be fair, all wasn’t great. Winnebago did report a 12% decline in its towable division. But overall, this was a report that did nothing to change the idea that demand is softening. On the earnings call, Winnebago CEO Michael Happe did sound a cautionary note about “uncertain market conditions” that would persist into next year. However, Happe also said he was “confident that our transformed and evolving business platform” would position the company for continued success.  

An Attractive Valuation 

Winnebago stock is down 29% in 2022. That’s despite the fact that the company continues to show higher year-over-year revenue and earnings. And in the case of a company like Winnebago comparisons to 2021 are significant. Production was hindered by pandemic restrictions and supply chain problems in 2020. So, 2021 was the recovery year.  

Investors, it seems, are banking on the fact that the company can’t keep up with that kind of growth. If that’s the case, the numbers don’t support that thesis.  

And with a price-to-earning ration of just over 5x, Winnebago is not a bad candidate for investors who are looking for a stock that may have all the bad news already priced into it.  

Smaller Growth, but Historically Good Growth 

Investing would be easy if we knew for certain what was going to happen. Since we don’t, we rely on analysts’ forecasts. In the case of Winnebago, 2022 is projected to be the high point for revenue and earnings in the next five years.  

But even with declining yearly revenue and earnings over the next five years, both are still projected to be well above pre-pandemic levels. That is not being reflected in the WGO stock price. Given the current macroeconomic conditions, that’s not too surprising. It does, however, support the notion that Winnebago may be undervalued in the current market.  

 

Should you invest $1,000 in Winnebago Industries right now?

Before you consider Winnebago Industries, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Winnebago Industries wasn't on the list.

While Winnebago Industries currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here


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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Winnebago Industries (WGO)
1.7785 of 5 stars
$56.81+1.5%1.90%6.02Hold$71.00
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Chris Markoch

About Chris Markoch

Contributing Author: Retirement, Individual Investing

Chris Markoch is a freelance financial copywriter with over five years of experience covering various aspects of the financial markets. You may find his writing a little different than other stock articles you’ve read. And that’s OK with him. Chris doesn’t have a traditional finance background. What he does bring to the table is a strong business and marketing background having worked for agencies that serviced Fortune 500 companies. With that in mind, he isn’t overly impressed with what companies say, and more focused on what they do. And because buyer behavior dictates so much of what happens with a stock, Chris always keeps the end consumer close in mind. Chris has been writing for MarketBeat since 2018.

Contact Chris Markoch via email at CTMarkoch@msn.com.

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