Is Camping World (CWH) Now a Value Trap or a Bargain Opportunity After a 55% Share Price Drop?

The 55% plunge in Camping World Holdings (CWH) shares since its 2025 peak has sparked a heated debate among investors: Is this a contrarian opportunity to buy a resilient business at a discount, or a value trap masking structural weaknesses? To answer this, we must dissect CWH's financial performance, industry dynamics, and valuation metrics through the lens of risk-reward asymmetry.

Financial Performance: A Tale of Two Sides

Camping World's Q3 2025 results reveal a mixed bag. Total revenue rose 4.7% year-over-year to $1.8 billion, driven by a 31.7% surge in used vehicle revenue to $589.1 million, while new vehicle sales fell 7.0% to $766.8 million according to Q3 2025 results. Adjusted EBITDA, however, surged 41.8% to $95.7 million, outpacing the net loss of $29.4 million-a figure skewed by a $175.4 million tax valuation charge and a $149.2 million adjustment to its Tax Receivable Agreement liability as reported in the Q3 2025 results. This highlights a critical nuance: CWH's core operations are generating robust cash flow, but non-operational accounting items distort its net income.

Management's confidence in 2026 is rooted in strategic shifts. The company has pivoted aggressively to used vehicle sales, which now contribute 32.7% of revenue (up from 29.4% in 2024), and anticipates maintaining used gross margins between 18% and 20% while new vehicle margins stabilize at 13%–14%. These margins, while modest, align with industry norms and suggest operational discipline.

Industry Outlook: Modest Growth, but Resilience Endures

The RV industry is not collapsing. According to the RV Industry Association (RVIA), 2026 wholesale shipments are projected to rise 2.8% to 349,300 units, with towable RVs outperforming motorized units. This stabilization is driven by pent-up demand for remote work-friendly living and the adoption of electrified RVs. Patrick Industries' executives note that while 2025 retail shipments dipped slightly, 2026 wholesale growth is expected to stabilize the supply chain.

Camping World's market position is pivotal. With a conservative adjusted EBITDA floor of $310 million for 2026-up from $285 million in 2025-it aims to outperform the industry by leveraging its used vehicle business, service division, and Good Sam membership platform as outlined in Seeking Alpha. CEO Marcus Lemonis has emphasized cost optimization, including a $15 million in SG&A savings via AI-driven efficiencies, as a catalyst for margin expansion.

Valuation: A High-Multiple Dilemma

Here lies the crux of the debate. As of August 2025, CWH traded at a P/E ratio of 52.7x and an EV/EBITDA multiple of 19.1x, far exceeding peers like Thor Industries (P/E: 24.81) and Winnebago (P/E: 38.05). These multiples are problematic given CWH's EBITDA margin of just 4%, which lags behind the recreation sector's average EV/EBITDA of 10.67 according to NYU Stern data.

However, valuation comparisons must account for growth. If CWH meets its 2026 adjusted EBITDA target of $310 million, its forward EV/EBITDA would normalize to 15.88x (based on its August 2025 multiple) or even 9.9x if discounted to the outdoor recreation sector's average as reported by Investing.com. This suggests the market is pricing in significant growth, but whether that growth materializes depends on CWH's ability to sustain used vehicle sales and manage debt.

Risk-Reward Analysis: A Contrarian's Dilemma

The risks are non-trivial. CWH's total liabilities stand at $4.51 billion, with a net leverage ratio that remains elevated despite EBITDA growth as noted by RVIA. A slowdown in used vehicle demand-driven by tighter credit or a shift in consumer preferences-could pressure margins. Additionally, the company's reliance on non-cash accounting adjustments (e.g., tax receivables) introduces volatility into its earnings.

Conversely, the reward is substantial. If CWH executes its 2026 guidance and EBITDA reaches $310 million, a re-rating to the recreation sector's average EV/EBITDA of 10.67x would imply a share price of approximately $14.50 (from a current price of $9.20 as of November 2025). This represents a 57% upside, assuming no further debt accumulation. For contrarian investors, the key question is whether the company's operational strengths-particularly in used vehicles and cost control-can justify this re-rating.

Conclusion: A Calculated Bet, Not a Certainty

Camping World is neither a clear-cut value trap nor an obvious bargain. Its share price drop reflects legitimate concerns about debt and valuation, but its operational performance-especially in used vehicles-and strategic focus on cost optimization present a compelling case for long-term growth. For investors with a high risk tolerance and a 2–3 year horizon, CWH could offer asymmetric upside if the company navigates macroeconomic headwinds and executes its 2026 plan. However, those averse to volatility or skeptical of its debt management should tread cautiously.

In the end, Camping World's story is a reminder that value investing requires dissecting the noise-whether from accounting charges or market sentiment-to uncover the underlying business.