Bull of the Day: Winnebago Industries (WGO)

Winnebago Industries, Inc. (WGO) is a leading maker of RVs in the United States, and distributes its products all throughout the country and Canada through independent dealers. The company has been manufacturing RVs for around 60 years, primarily at its facilities in Iowa and Indiana.
Q2 Earnings Recap
The RV industry is booming right now, and WGO is reaping the rewards.
Sales for the second quarter spiked 34% to $840 million, marking the second straight quarter of revenue acceleration.
All of its main segments witnessed impressive growth as well. WGO’s towable division grew 55% year-over-year, while motorhome sales were up 18%. Both divisions are still benefitting from high demand for RV products across the board.
Q2 was also another very profitable period. Gross margin expanded 590 basis points to 18.6%, and adjusted EPS came in at a record $2.12 per share, up 216% compared to the prior year period.
And despite winter season challenges like increasing manufacturing volume and supple chain bottlenecks, Winnebago was still able to improve net income to 12% of sales.
"I am especially excited and extremely grateful for our team’s ability to deliver strong profitability in the midst of a very dynamic environment," CEO Michael Happe said.
WGO Breaks Out
In the past six months, shares of WGO have jumped over 44% compared to the S&P 500’s 21.1% increase. Earnings estimates have been rising too, and WGO is a Zacks Rank #1 (Strong Buy) right now.
For fiscal 2021, six analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up $1.32 to $7.24 per share. Earnings are expected to grow over 180% compared to the prior year period. Fiscal 2022 looks strong too, and earnings should see positive year-over-year growth as well.
Looking ahead, management is not anticipating any “significant” decline in retail momentum and outdoor product demand, and the team believes that the interest in the RV niche will stick around long after the threat of Covid-19 disappears.
Winnebago now accounts for 11.5% of the RV industry, up from 10.6% a year ago, and with growing market share and a large product portfolio, the company has all the right factors in place to keep growing its top and bottom lines.
If you’re an investor searching for a specialty automotive stock to add to your portfolio, make sure to keep WGO on your shortlist.
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