Recreational vehicle (RV) manufacturer Winnebago Industries (NYSE: WGO) shares have been retreating since posting strong fiscal Q4 fiscal 2021 earnings. Despite the record top line and bottom line $0.52 per share earnings beat, the stock sold off over (-10%) of its recent highs. The pandemic winner is continuing to see growth despite the reopening trend and continues to see a record backlog as demand remains high. Investors fear that rising interest rates will negatively impact highly discretionary RV purchases in addition to rising fuel prices. However, the growth of remote work and the elastic office is also a tailwind that could offset interest rate effects, especially as travel and leisure pent-up demand continues. More and more, RVs are being used as mobile offices as the pandemic spurred growth which has yet to slow down. Shares are trading at a 9X price earnings. Prudent investors seeking a discounted entry into a major RV brand can watch for opportunistic pullbacks in shares of Winnebago.
Q4 FY 2021 Earnings Release
On Oct. 20, 2021, Winnebago released its fiscal fourth-quarter 2021 results for the quarter ending August 2021. The Company reported a profit of $2.57 per share to blow out consensus analyst estimates for $2.05 per share by $0.52 per share. Revenues rose 40.4% year-over-year (YoY) to $1.04 billion beating consensus analyst estimates for $970 million. The Company gained 2.1% in RV market share for the quarter. Gross margins expanded 150 basis points to 18.1%. Winnebago CEO Michael Happe commented, “Winnebago Industries delivered a strong fourth quarter to finish a record Fiscal 2021. The new heights we were able to achieve in revenues and profitability demonstrate the unique strength and appeal of our growing platform of leading brands. Our resilient and focused team continues to successfully manage through a growing backlog and supply chain challenges while driving tremendous preferences for our premium outdoor lifestyle products. In an environment of high demand, low dealer inventories, tight supply chain, and dynamic cost pressures our market share gains accelerated in the fourth quarter as more consumers sought Winnebago Industries’ high-quality, innovative products and exceptional service. We announced the acquisition of Barletta Boat Company in the fourth quarter, and completed the transaction in early Fiscal 2022, extending our marine platform into one of the fastest-growing boating segments in pontoons and advancing our premier outdoor lifestyle company vision. As always, I want to thank our 6,500+ Winnebago Industries employees who have worked extremely hard during very dynamic and challenging times. It is their efforts that allow us to deliver on our customer, dealer, and shareholder expectations.”
Conference Call Takeaways
CEO Happe set the tone, “Our fourth-quarter fiscal 2021 was a strong finish to a remarkable year, characterized by record revenue and record profitability, propelled by 3 key factors: first, a sustained elevated excitement for the outdoor lifestyle remained a powerful tailwind driving demand for Winnebago Industries premium products. Winnebago Industries grew fourth-quarter revenues 40.4% year-over-year and 56.8% on an organic basis ex-Newmar compared to our fiscal 2019 fourth quarter; second, Winnebago Industries trend of expanding market share accelerated in the fourth quarter, gaining a full 2.1 percentage points of share during the 3-month period ending August. Importantly, this is driven by both new and experienced consumers who recognize the differentiated quality and innovation in Winnebago Industries brand portfolio. And the exceptional service we are known to provide in partnership with our dealers; and third, our team's relentless demonstration of operational excellence, which enabled us to deliver for consumers and our dealer partners efficiently and profitably during a very challenging period as supply constraints and inflation have endured. As a result, we expanded margins in both our Motorhome and Towable segments during the fourth quarter. Before I continue, I want to recognize the superb Winnebago Industries, employee team. Our employees now 6,800 plus drawn with the addition of Barletta, have worked tirelessly to provide the high-quality products and exceptional service our customers and dealer partners have come to expect.” He concluded, “Winnebago Industries is increasingly winning with customers, and we're proud that an outsized share of new outdoor adventures has chosen to become part of the Winnebago Industries' community. As of August 2021, our RV fiscal year-to-date market share is now 12.5%, up 140 basis points from the same period last year. Even better, we've been able to achieve these gains while maintaining record low levels of discounting. Our performance and ability to capture share in the full value of our products in a competitive market underscores the unique appeal of our differentiated brand portfolio, which includes a broad range of options for new customers as they enter the market as well as more premium products as customers upgrade and move up the value chain.”
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 was set up for a pup breakout driven by a stochastic mini pup on the spike through the $79.61 Fibonacci (fib) level. However, earnings quickly killed the pattern as shares collapsed through the weekly 5-period moving average (MA) at $71.76 and 15-period MA at $70.94. The weekly stochastic crossed down following the price plunge. The weekly lower Bollinger Bands (BBs) sit at the $59.77 fib. The daily rifle chart downtrend has a falling 5-period MA at $70.13 with a daily lower BBs at $64.67. The daily market structure low (MSL) buy triggers a breakout through $68.17. The daily stochastic has fallen under the 20-band. Prudent investors can watch for opportunistic pullbacks at the $67.14 fib, $62.81 fib, $59.77 fib, $56.73 fib, $52.40 fib, and the $49.83 fib level. Upward trajectories range from the $79.61 fib upwards to the $94.48 level.
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