Winnebago earnings preview: Battling industry hurdles, looking to surprise
Winnebago Industries (WGO) is bracing to unveil its Q2 (Feb) earnings, with projections indicating a 55% dip in adjusted EPS to $0.85 and a 10% fall in revenue to $706.45 million. In line with Thor Industries (THO), WGO is wrestling with a tough RV market, juggling high interest rates and rising ownership costs. Yet, the company's outlook remains positive, eyeing a market rebound in the latter half of 2024.
A key differentiator for WGO is its marine division, contributing to about 10% of its yearly sales. Like RVs, the marine sector faces similar pressures, with parts supplier LCI Industries (LCII) noting a recent industry slowdown. Both WGO and THO are playing it safe production-wise, hoping for interest rate drops to revive demand and aid dealers grappling with high financing costs.
While WGO has minimal international sales (4% from its marine business), the impact on Q2 results might be minimal, considering parallel economic conditions across North America and Europe.
Despite current market challenges, WGO and THO are bullish about the RV industry's long-term appeal, thanks to a pandemic-driven surge in camping enthusiasts. This sentiment is expected to shine through once the economic climate improves.
WGO is particularly hopeful about ending the current RV dealer destocking cycle, aiming for a retail and wholesale market boost by mid to late 2024, a stance likely reinforced despite THO's recent soft performance.
Following a dip on THO's report, WGO's stock is hovering below its 200-day moving average (65.33). A continued optimistic outlook could propel the shares past this resistance.
With a market cap of $1.86 billion and trading at a forward P/E ratio of 10.63, below the S&P 500's 18.7 and the Consumer Cyclical sector's 28.28, WGO presents as a potentially appealing pick for investors eyeing the sector's recovery phase.
In summary, despite facing significant industry headwinds, Winnebago remains hopeful for a turnaround in the latter half of 2024. Its stock positioning and valuation make it an interesting watch for investors banking on the RV and marine sectors' resilience.