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Winnebago (WGO) Up 0.3% 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 0.3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Winnebago Puts Up a Stellar Show in Q2

Winnebago reported second-quarter fiscal 2021 (ended Feb 27, 2021) adjusted earnings per share of $2.12, surpassing the Zacks Consensus Estimate of $1.39. The bottom line compares favorably with the year-ago earnings of 67 cents per share, marking a whopping surge of 216.4% year over year. This recreational vehicle (RV) maker reported revenues of $840 million during the quarter under review, outpacing the Zacks Consensus Estimate of $804 million. Moreover, the top line improved 34% year over year.

The firm reported an operating income of $100 million compared with the year-ago income of $29.6 million, reflecting a whopping increase of 237.3% year on year.

Segmental Performance

Revenues in the Towable segment for the reported quarter surged 55% year over year to $439.3 million primarily on solid consumer demand for Grand Design and Winnebago products. The reported figure also topped the consensus mark of $352 million. Quarterly adjusted EBITDA was up 79.5% year on year to $62.4 million courtesy of favorable pricing and operational discipline. Moreover, backlog in the segment increased to 39,855 units (or $1,206 million), up a whopping 307.1%, year over year, reflecting skyrocketing consumer demand during the fiscal second quarter.

During the reported quarter, revenues in the Motorhome segment improved 17.5% year over year to $382.6 million on the Newmar buyout and stellar Class B product sales. The revenue figure, however, lagged the Zacks Consensus Estimate of $507 million.  Nonetheless, the segment recorded an EBITDA of $51 million, significantly up from the year-ago quarter’s level by 241%. Also, the segment’s backlog increased to 14,974 units (or $1,816.5 million), skyrocketing 424.3%, year on year, highlighting surging consumer demand during the reported quarter.

Financials and Dividend

Winnebago had cash and cash equivalents of $333 million as of Feb 27, 2021, up from $292.6 million as of Aug 29, 2020. Long-term debt (excluding current maturities) totaled $520.3 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 Apr 28, 2021 to shareholders of record as of Apr 14, 2021.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 32.49% due to these changes.

VGM Scores

At this time, Winnebago has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Winnebago has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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