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Should Value Investors Opt for Winnebago (WGO) Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Winnebago Industries, Inc. (WGO - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Winnebago has a trailing twelve months PE ratio of 15.36. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.36.
If we focus on the long-term trend of the stock, the current level puts Winnebago’s current PE below its median (which stands at 16.57) over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting that the stock is undervalued compared to its own historical levels. Thus, this could prove to be a suitable entry point into the stock.
Further, the stock’s PE also compares considerably favorably with the Zacks classified Construction sector’s trailing twelve months PE ratio, which stands at 19.18. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Winnebago has a forward PE ratio (price relative to this year’s earnings) of 12.49 – which is lower than the current figure. So it is fair to say that a slightly more value-oriented path may be ahead for Winnebago stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Winnebago has a P/S ratio of about 0.84. This is significantly lower than the Zacks categorized Construction sector average, which comes in at 2.26 right now. In fact, the stock has always been relatively undervalued compared to the industry, in this respect.
Notably, WGO is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Winnebago currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Winnebago a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/B ratio (used to compare a stock's market value to its book value) stands at 2.40, much lower than the sector average of 3.14. Clearly, WGO is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Winnebago might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives WGO a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Winnebago seems to have pretty striking prospects.
Meanwhile, the company’s recent earnings estimates have been mixed at best. While the current quarter consensus estimate has inched lower by 2.2% over the past month, the full year estimate has moved north by 3.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Winnebago is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. It forms a part of the Zacks Categorized Building Products - Mobile Homes and RV Builders industry, which ranks among the Top 40% out of more than 250 industries.
Notably, the increasingly growing industry has outpaced the broader market over the last two years, as you can see below:
Meanwhile, Winnebago is positioned to benefit from growing new motorhome market traction, focus on business expansion and quality improvement. Management also expects to gain from better performance of the towables business, driven by product launches, expansion of its dealer network and improved productivity. However, the company is currently facing challenges like dependence on a few dealers and the burden of repurchase agreements. Nevertheless, the recent acquisition of towable recreation vehicles producer, Grand Design, bodes well for Winnebago.
So, value investors might want to wait for analyst sentiment to turnaround in the name first, but once that happens, this stock could be a compelling pick.
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Should Value Investors Opt for Winnebago (WGO) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Winnebago Industries, Inc. (WGO - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Winnebago has a trailing twelve months PE ratio of 15.36. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.36.
If we focus on the long-term trend of the stock, the current level puts Winnebago’s current PE below its median (which stands at 16.57) over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting that the stock is undervalued compared to its own historical levels. Thus, this could prove to be a suitable entry point into the stock.
Further, the stock’s PE also compares considerably favorably with the Zacks classified Construction sector’s trailing twelve months PE ratio, which stands at 19.18. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Winnebago has a forward PE ratio (price relative to this year’s earnings) of 12.49 – which is lower than the current figure. So it is fair to say that a slightly more value-oriented path may be ahead for Winnebago stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Winnebago has a P/S ratio of about 0.84. This is significantly lower than the Zacks categorized Construction sector average, which comes in at 2.26 right now. In fact, the stock has always been relatively undervalued compared to the industry, in this respect.
Notably, WGO is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Winnebago currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Winnebago a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/B ratio (used to compare a stock's market value to its book value) stands at 2.40, much lower than the sector average of 3.14. Clearly, WGO is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Winnebago might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives WGO a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Winnebago seems to have pretty striking prospects.
Meanwhile, the company’s recent earnings estimates have been mixed at best. While the current quarter consensus estimate has inched lower by 2.2% over the past month, the full year estimate has moved north by 3.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Winnebago Industries, Inc. Price and Consensus
Winnebago Industries, Inc. Price and Consensus | Winnebago Industries, Inc. Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Winnebago is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. It forms a part of the Zacks Categorized Building Products - Mobile Homes and RV Builders industry, which ranks among the Top 40% out of more than 250 industries.
Notably, the increasingly growing industry has outpaced the broader market over the last two years, as you can see below:
Meanwhile, Winnebago is positioned to benefit from growing new motorhome market traction, focus on business expansion and quality improvement. Management also expects to gain from better performance of the towables business, driven by product launches, expansion of its dealer network and improved productivity. However, the company is currently facing challenges like dependence on a few dealers and the burden of repurchase agreements. Nevertheless, the recent acquisition of towable recreation vehicles producer, Grand Design, bodes well for Winnebago.
So, value investors might want to wait for analyst sentiment to turnaround in the name first, but once that happens, this stock could be a compelling pick.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>