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Bear of the Day: Camping World (CWH)

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Camping World Holdings, Inc. (CWH - Free Report) had a record quarterly report but analysts are bearish due to the macro headwinds. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline by the double digits in 2022.

Camping World is America's largest retailer of RVs and related products and serves. It owns two brands, Camping World and Good Sam. It has a network of RV dealerships, service centers and customer support centers.

Camping World has over 185 locations in 42 states.

A Record Quarter but a Miss in Q1

On May 3, Camping World reported its first quarter results and missed on the Zacks Consensus by $0.14. Earnings were $1.15 versus the consensus of $1.29.

Yet it was a record quarter for revenue, up 6.7% to $1.7 billion.

Gross margin also rose 29 basis points to 33.7%.

New and used vehicle inventories rose to $1.8 billion, an increase of $938.3 million. The increase was driven by strategic growth of the used vehicle business, an additional 14 locations, and the easing of new vehicle supply chain constraints in their core categories which was experienced for much of the prior year.

It was this increase in inventory that has some of the analysts worried.

Analysts Cut Estimates

Even with record revenue, the analysts are bearish due to the macro headwinds. On the conference call for the quarterly report, Camping World noted slowing of sales with the start of the Ukraine War. Additionally, new RV inventory is rising quickly.

5 estimates were cut for 2022 in the last 30 days pushing the Zacks Consensus Estimate down to $4.91 from $5.83 during that time.

That's an earnings decline of 28.6% from 2021 when Camping World made $6.88.

Shares Tumble in 2022

Camping World shares have taken a tumble in 2022, losing 36% year-to-date.

They're cheap, with a forward P/E of 5.3. But the earnings estimates are also turning down for both 2022 and 2023 which makes them a value trap.

Zacks Investment Research
Image Source: Zacks Investment Research

Camping World pays a dividend, currently yielding 9.6%.

But investors might want to wait on the sidelines until the earnings outlook turns around and the macro uncertainty stabilizes.


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