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Why Is Winnebago (WGO) Down 8.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Winnebago Industries (WGO - Free Report) . Shares have lost about 8.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Winnebago due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Winnebago Delivers Better-Than-Expected Results in Q3

Winnebago reported a loss of 26 cents per share in third-quarter fiscal 2020, narrower than the Zacks Consensus Estimate of a loss of 41 cents. Higher-than-expected revenues from the Motorhome segment led to the outperformance. However, earnings of $1.14 a share were recorded in the year-ago quarter. Weak demand and disruptions across dealer network and supply chain due to coronavirus woes impacted the firm.

Precisely, sales from the Motorhome unit came in at $203.6 million, surpassing the Zacks Consensus Estimate of $170 million.

Revenues in the reported quarter decreased 24% year over year to $402.4 million. The top line, however, beat the Zacks Consensus Estimate of $326 million. The company recorded higher year-over-year operating expenses amid increased amortization costs. The firm incurred operating loss of $8.1 million against the year-ago income of $48.9 million. 

Segment Results

Revenues in the Towable segment declined 45.5% year over year to $188.9 million due to manufacturing suspension and lower consumer demand amid the coronavirus pandemic. Adjusted EBITDA plunged 71.2% year over year to $16.5 million. Backlog increased 86.7% year over year with 13,235 units as of May 30, reflecting a strong rebound in dealer demand in the month.

Revenues in the Motorhome segment improved 27.1% year over year to $203.6 million driven by the Newmar buyout, partly offset by COVID-19 woes. Excluding the impact of the acquisition, revenues decreased 27.9% from the prior-year period. The segment recorded a negative EBITDA of $10.8 million. However, the metric narrowed from the year-ago quarter’s $11.2 million negative EBITDA. Backlog increased 99.2% year over year to 4,131 units due to the addition of Newmar and a strong rebound in dealer demand in May.

Financials & Dividend

Winnebago had cash and cash equivalents of $152.5 million as of May 30, 2020. Long-term debt totaled $451.3 million, up from $245.4 million recorded on Aug 31, 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 13.06% due to these changes.

VGM Scores

Currently, Winnebago has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Winnebago has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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