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The Company builds quality motorhomes, travel trailers, fifth wheel products and boats. Winnebago Industries has multiple facilities in Iowa, Indiana, Minnesota and Florida"
More About Winnebago Industries
Winnebago Industries, Inc. is a leading North American manufacturer of outdoor lifestyle products under the Winnebago, Grand Design, Chris-Craft, and Newmar brands, which are used primarily in leisure travel and outdoor recreation activities. The Company builds quality motorhomes, travel trailers, fifth wheel products and boats. Winnebago Industries has multiple facilities in Iowa, Indiana, Minnesota and Florida. The Company's common stock is listed on the New York Stock Exchange and traded under the symbol WGO
Overview of Winnebago's 1st quarter 2021 earnings report
- Organic RV Market Share Gains Continue, Rising 110 Basis Points on a Trailing Twelve Month Basis
- Quarterly Revenues Up 34.8% Year-Over-Year, Bolstered by Strong End Consumer Demand
- First Quarter Gross Margin Expansion of 390 Basis Points
- Reported Diluted EPS of $1.70;
- Adjusted EPS of $1.69 Up 131.5% Over Prior Year
- Dividend declared: $0.12
- Stockholders equity per share: $25.75
- Record Order Backlogs and Retail Sales Momentum Validate Continued Interest in the Outdoors
Production of Winnebago
We generally produce towables and motorhomes made to order for dealers. We have some ability to increase our capacity by scheduling overtime and/or hiring additional production employees or to decrease our capacity through the use of shortened work weeks and/or reducing head count. We have long been known as an industry leader in innovation as each year we introduce new or redesigned products. These changes generally include new floor plans, features, functionality, and sizes as well as design and decor modifications. Most of our raw materials such as steel, aluminum, fiberglass, and wood products are obtainable from numerous sources. Our towables are produced at two assembly campuses located in Middlebury, IN. The majority of components are comprised of frames, appliances, and furniture, and are purchased from suppliers. In Fiscal 2020, we had one supplier that accounted for more than 10% of our Towable raw material purchases. Our motorhomes are produced in the states of Iowa and Indiana at five different campuses. Our motorhome business utilizes vertically integrated supply streams, with the principal exceptions being chassis, engines, generators, and appliances that we purchase from reputable manufacturers. Certain parts, especially motorhome chassis, are available from a small group of suppliers. In Fiscal 2020, we had one supplier that accounted for more than 10% of our motorhome raw material purchases.
Backlog of Winnebago
We strive to balance timely order fulfillment to our dealers with the lead times suppliers require to efficiently source materials and manage costs. Production facility constraints at peak periods also lead to fluctuations in backlog orders which we manage closely. The approximate revenue of our Towable backlog was $747.9 million and $234.3 million as of August 29, 2020 and August 31, 2019, respectively. The approximate revenue of our Motorhome backlog was $1,051.4 million and $165.4 million as of August 29, 2020 and August 31, 2019, respectively
Distribution and Financing
We market our products on a wholesale basis to a diversified independent dealer network located throughout the U.S. and, to a limited extent, in Canada, Africa, Asia, Europe, Australia, and South America. Foreign sales were 10% or less of Net revenues during each of the past three fiscal years. As of August 29, 2020, our RV and marine dealer network in the U.S. and Canada included 642 physical dealer locations, many of which carry more than one of our brands. None of our dealer organizations accounted for more than 10% of our Net revenues for Fiscal 2020, 2019, and 2018. We have sales and service agreements with dealers which are subject to annual review. Many of the dealers are also engaged in other areas of business, including the sale of automobiles, trailers, or boats, and most dealers carry one or more competitive lines of RVs. We continue to place high emphasis on the capability of our dealers to provide complete service for our products. Dealers are obligated to provide full service for owners of our products or, in lieu thereof, to secure such service from other authorized providers. We advertise and promote our products through national trade magazines, the distribution of product brochures, the Go RVing national advertising campaign sponsored by RVIA, our websites, social media, direct-mail advertising campaigns, various national promotional opportunities, and on a local basis through trade shows, television, radio, and newspapers, primarily in connection with area dealers. Sales to dealers are made primarily on cash terms. Most dealers are financed on a "floorplan" basis under which a bank or finance company lends the dealer all, or substantially all, of the purchase price, collateralized by a security interest in the merchandise purchased. As is customary in our industries, we typically enter into a repurchase agreement with a lending institution financing a dealer's purchase of our product upon the lending institution's request and after completion of a credit check of the dealer involved. Our repurchase agreements provide that, for up to 18 months after an RV unit is financed and up to 24 months after a marine unit is financed, in the event of default by the dealer on the agreement to pay the lending institution and repossession of the unit(s) by the lending institution, we will repurchase the financed merchandise from the lender at the amount then due, which is often less than dealer invoice. Our maximum exposure for repurchases varies significantly from time to time, depending upon the level of dealer inventory, general economic conditions, demand for our products, dealer location, and access to and the cost of financing
Competition of Winnebago
The RV and marine markets are highly competitive with many other manufacturers selling products which compete directly with our products. Some of our competitors are much larger than us, most notably in the towable RV market, which may provide these competitors additional purchasing power. The competition in our industry is based upon design, price, quality, features, and service of the products. We believe our principal competitive advantages are our brand strength, product differentiation, product quality, and our service after the sale. We also believe that our products have historically commanded a price premium as a result of these competitive advantages.
Seasonality of Winnebago's earnings
The primary use of RVs and marine products for leisure travel and outdoor recreation has historically led to a peak retail selling season concentrated in the spring and summer months and lower sales during winter months. Our sales are generally influenced by this pattern in retail sales, but sales can also be affected by the level of dealer inventory. As a result, our RV sales are historically lowest during our second fiscal quarter, which ends in February
Winnebago (WGO) stock price history over the last 5 years
The image below, obtained from Google shows the stock price history of Winnebago (WGO) for the last 5 years and it's been a pretty good time for Winnebago (WGO) stockholders over the last 5 years. 5 years ago the stock was trading at around $30 and its currently trading at $62.67. That's a very strong return of 109% provided to Winnebago (WGO) stockholders over the last 5 years.
The stock of Winnebago (WGO) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Winnebago (WGO) stock is very positive at this point in time.
The stock of Winnebago (WGO) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Winnebago (WGO) stock is very positive at this point in time.
Winnebago (WGO) stock vs Thor (THO) stock over the last 5 years
The image below shows the stock price history of Winnebago (WGO) and Thor (THO) over the last 5 years. Both firms are active in the manufacture and selling of recreational vehicles (RV). The summary below shows the stock price performance of these two firms over the last 5 years:
While the overall trends and performance of the two firms are fairly similar its the stock of Winnebago that has outperformed that of Thor over the last 5 years.
- Winnebago : 109%
- Thor Industries: 91.3%
While the overall trends and performance of the two firms are fairly similar its the stock of Winnebago that has outperformed that of Thor over the last 5 years.
Latest stock valuation of Winnebago (WGO)
So what is Winnebago (WGO) stock worth based on their 1st quarter 2021 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Winnebago (WGO) at $64.30 a stock.
We therefore believe the stock of Winnebago is fully valued at its current price of $62.67
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $64.30, thus a good entry point into Winnebago would be at $57.80 or below.
We expect the stock of Winnebago to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued
We therefore believe the stock of Winnebago is fully valued at its current price of $62.67
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $64.30, thus a good entry point into Winnebago would be at $57.80 or below.
We expect the stock of Winnebago to pull back from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is overvalued
Next earnings release of Winnebago (WGO)
It is expected that Winnebago will release their 2nd quarter 2021 earnings report in late March 2021
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