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Winnebago (WGO) Up 10.2% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Winnebago Industries (WGO - Free Report) . Shares have added about 10.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Winnebago due for a pullback? 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 drivers.

Winnebago Puts on a Stellar Show in Q1

Winnebago reported first-quarter fiscal 2021 (ended Nov 28, 2020) adjusted earnings per diluted share of $1.69, surpassing the Zacks Consensus Estimate of earnings of $1.03. This outperformance can be attributed to the higher-than-anticipated adjusted EBITDA from the company’s Towable and Motorhome segments. Adjusted EBITDA from the Towable and Motorhome segments came in at $63.1 million and $30.3 million, respectively, beating the Zacks Consensus Estimate of $44.75 million and $22 million.

The bottom line compares favorably with the year-ago earnings of 73 cents per share, marking a year-over-year surge of 131.5%.

This recreational vehicle (RV) maker registered revenues of $793.1 million during the reported quarter, handily beating the Zacks Consensus Estimate of $742 million. Moreover, the top line recorded a 34.8% year-over-year jump.

The firm reported an operating income of $85 million compared with the year-ago income of $23.9 million, skyrocketing 255.8% year on year.

Segmental Performance

Revenues in the Towable segment for the reported quarter climbed 33.3% year over year to $454.9 million primarily on solid consumer demand for Grand Design and Winnebago products. The reported figure also topped the consensus mark of $402 million. Quarterly adjusted EBITDA was up 76.5% year on year to $63.1 million.

Moreover, backlog in the segment increased to $865.4 million, up a whopping 256.4%, year over year, reflecting skyrocketing consumer demand during the fiscal first quarter.

During the reported quarter, revenues in the Motorhome segment improved 42.7% year over year to $322.4 million on the Newmar buyout and stellar Class B product sales. The revenue figure, however, marginally lagged the Zacks Consensus Estimate of $324 million.  Nonetheless, excluding the impact of the acquisition, revenues increased 7% from the prior-year period.

The segment recorded an EBITDA of $30.3 million, significantly up from the year-ago quarter’s EBITDA by 225.2%. Also, the segment’s backlog increased to $1.7 billion, skyrocketing 344.9%, year on year, highlighting surging consumer demand during the reported quarter.

Costs, Financials and Dividend

Selling, general and administrative expenses for the fiscal first quarter dropped to $48.4 million from the prior-year quarter’s $51.1 million.

Winnebago had cash and cash equivalents of $272.9 million as of Nov 28, 2020, down from the $292.6 million as of Aug 29, 2020. Long-term debt (excluding current maturities) totaled $516.5 million, slightly up from the $512.6 million recorded on Aug 29, 2020.

The firm announced a quarterly cash dividend of 12 cents per share payable on Jan 27, 2021 to shareholders of record as of Jan 13, 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 24.9% due to these changes.

VGM Scores

At this time, Winnebago has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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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