Camping World Holdings: Is This the Setup for a Value-Driven Recovery Play?

In the world of contrarian value investing, the most compelling opportunities often arise when the market underestimates a company's potential to adapt and thrive in a high-growth sector. Camping World Holdings (CWH) fits this mold. Despite a recent adjusted EBITDA loss of $2.5 million in Q4 2024, the company's strategic pivot to the used RV market, improving operational leverage, and robust cash position suggest a compelling case for a value-driven recovery. Let's dissect why CWH could be a contrarian gem in the RV sector.

The RV Sector: A High-Growth, Low-Multiple Backdrop

The recreational vehicle (RV) industry is experiencing a renaissance. Post-pandemic demand for leisure travel, coupled with a surge in remote work and a growing retiree population, has driven RV sales to record levels. In 2025, the sector is projected to reach $52.1 billion in revenue, with a compound annual growth rate (CAGR) of 4.6%. Yet, despite this momentum, the RV sector remains undervalued relative to its growth potential. The industry's average EV/EBITDA multiple stands at 9.15x, while Camping World Holdings trades at a premium of 19.1x. On the surface, this might seem like a disconnect—but dig deeper, and the story becomes more nuanced.

CWH's Strategic Reinvention: The Used RV Play

CWH's management, led by CEO Marcus Lemonis, has identified a critical opportunity in the used RV market. Used units now account for 11% of sales growth, with a gross margin of 18.7%, outpacing new units at 15.2%. This shift is not accidental—it's a calculated move to align with consumer demand for affordability. With target average selling prices (ASPs) of $40,000 for new units and $32,000 for used, CWH is positioning itself to capture a broader demographic, including budget-conscious buyers and first-time RV owners.

The company's inventory mix is also being optimized. By focusing on used RVs, CWH is leveraging its $339 million in used inventory (net of flooring) to drive higher-margin sales. This strategy is paying off: Good Sam, the company's membership and services arm, reported 1% revenue growth in Q4, contributing $95 million in EBITDA. As Lemonis noted in the earnings call, “The used RV segment is a cornerstone of our EBITDA growth and leverage reduction.”

Operational Leverage: A Path to Profitability

CWH's path to profitability hinges on improving operational leverage. The company anticipates a 600–700 basis point improvement in SG&A expenses in 2025, driven by cost-cutting measures such as headcount reductions and gross profit growth. This is critical, as SG&A costs were inflated in Q4 by unexpected insurance claims and weather-related disruptions. With these headwinds behind it, CWH's SG&A efficiency should normalize, creating a clearer path to positive EBITDA.

The company's balance sheet also provides a buffer. CWH holds $288 million in cash, including $80 million in the floor plan offset account, and owns real estate valued at $169 million without a mortgage. These assets provide flexibility to fund growth initiatives, such as its $330 million in raised capital and $300 million floor plan facility expansion. With a total runway of $2.15 billion, CWH is well-positioned to scale its used RV procurement and service offerings.

Contrarian Case: High Growth, Low Multiples

While CWH's EV/EBITDA of 19.1x appears steep against the sector average of 9.15x, this metric fails to capture the company's unique positioning. The RV sector's low multiples reflect its cyclical nature and sensitivity to macroeconomic factors like interest rates and tariffs. However, CWH's focus on used RVs—a segment less impacted by new vehicle production delays—provides a more stable revenue stream. Additionally, the company's EBITDA loss in Q4 was a marked improvement from $8.9 million in the prior year, signaling progress.

Risks and Realities

No contrarian play is without risks. CWH faces macroeconomic headwinds, including potential tariffs on imported metals and rising interest rates, which could dampen consumer financing. Insurance costs and weather volatility also pose near-term challenges. However, the company's strategic focus on affordability, operational efficiency, and used RVs mitigates these risks. For instance, its target ASPs are designed to align with monthly payment structures that remain attractive even in a high-rate environment.

Investment Thesis: A Recovery Play with Legs

For investors with a 12–18 month horizon, CWH offers a compelling value proposition. The company's strong cash position, strategic pivot to high-margin used RVs, and improving SG&A efficiency create a runway for EBITDA recovery. While the stock trades at a premium to the sector, its growth trajectory and market share ambitions (12% in 2025) justify a higher multiple.

Key Takeaway: Camping World Holdings is not a short-term trade but a long-term bet on the RV sector's resilience and CWH's ability to capture value in the used market. For those willing to stomach near-term volatility, the company's fundamentals suggest a recovery is well underway.

In a market that often overreacts to short-term earnings misses, CWH's story is a reminder that value investing requires patience and a focus on long-term fundamentals. The RV sector's growth, combined with CWH's strategic agility, could make this a standout recovery play in 2025.