Yahoo Finance Bear of the Day: Winnebago Industries (WGO)
Winnebago Industries (WGO) is a Zacks Rank #5 (Strong Sell) that manufactures and sells recreation vehicles and marine products primarily for use in leisure travel and outdoor recreation activities.
The stock has taken another leg lower after an earnings report and is challenging 2023 lows. With earnings disappointing and estimates headed lower, investors should be cautious at current levels.
About the Company
Winnebago is headquartered in Eden Prairie, MN, and was founded in 1958. The company employs over 6,000 people and operates through three segments: Towable RV, Motorhome RV, and Marine.
WGO is valued at $1.5 billion and has a Forward PE of 12. The stock holds Zacks Style Scores of “A” in Value, but D in Momentum. The stock pays a dividend of 2.3%.
Q3 Earnings
On June 20th, Winnebago reported an earnings miss of 13%. Revenues came in below expectations and gross margins were down 180 basis points from last year.
Adjusted EBITDA was off 39% from last year as revenues were down across most categories year over year:
- Motorhome Revenues were -20% y/y
- Motorhome Backlog was -55.7% y/y
- Towable Revenues were +0.6% y/y
- Towable Backlog was -35.1% y/y
Management acknowledges the challenging market conditions but remains focused on the long-term profitability and customer satisfaction of premium brands.
However, analysts and investors do not seem so optimistic, with both estimates and the stock headed lower.
Earnings Estimates
Since earnings were reported there has been a significant drop in earnings estimates.
Over the last 7 days, analysts have lowered numbers for the current quarter from $1.67 to $1.11. This is a drop of 33% that was due to the Q3 earnings release.
For the next quarter, estimates have fallen to $1.18 from $1.45, or 19%.
For the current year, numbers have dropped 13%, going from $5.02 to $4.37
This downtrend has been occurring for some time and when looking at next year you can see evidence of that. Over the last 60 days, estimates for 2025 have dropped from $7.05 to $5.98, or 15%. During that time frame, the stock had fallen almost 20%.
Technical Take
The stock has now dropped to levels not seen since late 2022. If the $50 level is taken out, you could see some panic and a move to the $43 area, which was the 2022 low.
The company pays a 2.3% dividend which could give the stock support in the low $40s. However, a turnaround in the stock should not be expected with moving averages turning sharply lower.
The 50-day MA is at $60.50 and the $200-day is at $64. The bulls and the company have a lot of work to do before the stock chart starts to look attractive again.
In Summary
Winnebago’s price action started to look good after the company reported earnings back in March. However, this was short-lived and the stock has plummeted over the last three months.
Investors should stay away until both the fundamental and technical pictures improve. For those interested in the space, a better option might be Thor Industries (THO). While the stock is also in a downtrend, THO is a Zacks Rank #3 (Hold) that is coming off a 13% EPS beat.
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Winnebago Industries, Inc. (WGO) : Free Stock Analysis Report
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