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Why Is Winnebago (WGO) Up 15.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Winnebago Industries (WGO). Shares have added about 15.5% 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 catalysts.

Winnebago Earnings Beat Estimates in Q1, Revenues Up Y/Y

Winnebago reported earnings of 73 cents per share in the first quarter of fiscal 2020, beating the Zacks Consensus Estimate of 70 cents. Notably, higher-than-expected revenues across all segments resulted in the outperformance. Sales in the Motorhome and Towable segments came in at $225.9 million and $341.3 million, beating the consensus mark of $185 million and $271 million, respectively. The bottom line also compared favourably with 70 cents a share recorded in the year-ago quarter.

Revenues in the reported quarter increased 19.2% year over year to $588.5 million. The revenue figure beat the Zacks Consensus Estimate of $530 million.

Nonetheless, higher year-on-year operating expenses resulted in the operating income to slip 26.7% to $23.9 million in the quarter. Total operating expenses flared up 42.8% year over year to $54.7 million in the fiscal first quarter.

Segment Results

Revenues in the Motorhome segment were up 24.6% year over year to $225.9 million, mainly aided by strength in the Class B line-up and the addition of Newmar revenues in the quarter. Adjusted EBITDA declined 22.1% year over year to $9.3 million, due to an unfavorable volume mix and higher SG&A expenses.

Revenues in the Towable segment improved 16.5% year over year to $341.3 million. This upside was driven by robust unit growth in the Grand Design RV product line. Adjusted EBITDA was $35.8 million, up 16.1%from the prior-year quarter.

Financial Position

Winnebago had cash and cash equivalents of $101.3 million as of Nov 30, 2019, compared with $37.4 million as of Aug 31, 2019. As of Nov 30, 2019, the company had long-term debt of $450.8 million, representing debt to capital ratio of 36.4%

For first-quarter fiscal 2020, the company’s cash flow from operations was $79 million, marking a rise of 45.9% year over year.

Dividend Payment

Winnebago’s board approved a dividend payment of 11 cents per share for the fiscal first quarter. The amount will be payable Jan 29, 2020, to shareholders of record as of Jan 15, 2020.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -15.48% due to these changes.

VGM Scores

Currently, Winnebago has a great Growth Score of A, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Winnebago has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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