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Winnebago (WGO) Down 4.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Winnebago Industries (WGO - Free Report) . Shares have lost about 4.3% 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 drivers.

Winnebago Earnings Beat Estimates in Q4, Revenues Down Y/Y

Winnebago reported earnings of $1.01 per share in the fourth quarter of fiscal 2019, beating the Zacks Consensus Estimate of 98 cents. The figure also grew from 94 cents a share in the year-ago quarter. Net income rose 7% year over year to $31.9 million. Earnings were positively impacted by an improved tax rate arising from the Tax Cuts and Jobs Act (TCJA).

Revenues in the reported quarter declined 1.1% year over year to $530.4 million. The figure beat the Zacks Consensus Estimate of $528.7 million.

Operating income in the quarter under review edged down 2% to $44.8 million. Gross profit declined to $83.2 million from $83.8 million a year ago.

Segment Results

Revenues at the Motorhome segment were down 12.2% year over year to $200.7 million. Adjusted EBITDA declined 18.9% year over year to $10.7 million.

Revenues at the Towable segment improved 6.3% year over year to $307 million. The upside was driven by pricing actions and strong organic deliveries across the Grand Design RV brand. Adjusted EBITDA was $42 million, slightly up from the prior-year quarter.

Financial Position

Winnebago had cash and cash equivalents of $37.4 million as of Aug 31, 2019, compared with $2.3 million as of Aug 25, 2018. As of August 31, 2019, the company had long-term debt of $245.4 million compared with $291.4 million as of Aug 25, 2018.

For fiscal 2019, the company’s cash flow from operations was $133.8 million, marking rise of 60.5% from fiscal 2018. The increase resulted from a year-over-year improvement in cash flow from changes in working capital.

Dividend Payment

Winnebago’s board approved a dividend payment of 11 cents per share for fourth-quarter fiscal 2019. The amount will be payable Sep 25 to shareholders of record as of Sep 11, 2019.

Key Developments

In sync with its commitment to build a diversified portfolio of iconic brands, the company announced that it acquired Newmar in mid-September. In fiscal 2019, Winnebago made significant progress in strengthening its core recreational vehicle business. Its venture into the marine industry also completed the first year successfully.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -33.12% due to these changes.

VGM Scores

At this time, Winnebago has a strong 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 top 40% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Winnebago has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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