Winnebago Industries, Inc.
(WGO - Analyst Report
) hit a 52-week high of $16.94 following its impressive fiscal first-quarter report on December 20, which saw an earnings surprise of nearly 200%. This manufacturer of recreational vehicles (RVs) also posted an increase in profits during the quarter, thanks to the popularity of its products and a strong dealer network. Furthermore, the company has achieved a Zacks #1 Rank (Strong Buy) based on strong earnings estimate revisions.
Impressive Earnings Growth
Winnebago Industries earned 26 cents per share for the fiscal first-quarter ended on December 1, beating the Zacks Consensus Estimate by 188.9% and up significantly from 4 cents a year ago.
Revenues surged 46.8% to $193.6 million. The improvement in sales and earnings were due to an additional week of operating performance (it was a 14-week quarter), higher weekly production rates due to strong demand, increased motor home deliveries and higher gross margins due to better overhead cost absorption.
Management is highly optimistic about the companys future performance due to its strong sales order backlog during a historically sluggish time of the year. Due to these factors, the company is likely to experience a better business environment in the near-term and can spend less on sales incentives.
Earnings Estimates Cruising Higher
The Zacks Consensus Estimate for fiscal 2013 advanced 36.4% in the past three months to 75 cents per share, reflecting a year-over-year increase of 200.0%. As for fiscal 2014, the Zacks Consensus Estimate jumped 46.2% to 95 cents in the last 60 days, indicating a year-over-year growth of 26.7%.
Valuation is Expensive but Justified
Winnebago currently trades at forward P/E of 34.6x, on par with the peer group average. However, the company has a higher price-to-book (P/B) ratio of 3.2 and price-to-sales (P/S) ratio of 0.7, compared to the peer group averages. The expensive valuation is justified given the companys faster growth in wholesale and retail sales compared to the overall industry. Winnebago also has a 1-year ROE of 11.2%, which is higher than the peer group average of 6.1%.
Chart Depicts Strength
The chart shows that 2012 started with a Golden Cross and formed a new trend that undoubtedly signals optimism. The stock also depicts good trend strength as both the moving average lines continue to rise and spread apart. Winnebago is currently trading above its 50- and 200-day moving averages, which stand at $13.62 and $11.11, respectively.
Volume is fairly strong, averaging roughly 209K daily. The company has outperformed the S&P 500 over the past year. The 1-year return for the stock is 115.0% compared with the S&P 500s return of 15.3%.
Headquartered in Forest City, Iowa, Winnebago Industries was incorporated in 1958. The $471.4 million company is one of this countrys leading manufacturers of RVs used mainly in leisure travel and outdoor recreation activities. The company produces motor homes and towables and supplies them to a diversified dealer organization in the U.S., and Canada. As of August 25, 2012, the companys motor home and towable dealer organizations included roughly 235 and 230 locations, respectively.
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