Winnebago Industries stuck in Neutral at Roth MKM

Following the company’s first quarter results, Roth MKM analyst Scott Stember has maintained his “Neutral” rating on Winnebago Industries (Winnebago Industries Stock Quote, Chart, News, Analysts, Financials NYSE:WGO).

On December 20, WGO reported its Q1, 2024 results. The company posted Adjusted EBITDA of $54.1-million on revenue of $763.0-million, a topline that was down 19.9 per cent from the the $952.2-million the company generated in the same period last year.

“Winnebago Industries’ first quarter results underscore the resilience of our diversified portfolio and variable cost structure in navigating a sales environment influenced by challenging retail trends and intentional inventory management by dealers,” CEO Michael Happe said. “Our steadfast commitment across our portfolio to production discipline that aligns with market conditions, and improving operational excellence continues to deliver solid profitability. Throughout the first quarter, we maintained our focus on recent and forthcoming multiple new product releases in the Towables RV segment, as well as a refreshed, entry-level Aria pontoon product in the Marine segment, that address vital considerations surrounding affordability, while staying true to our reputation for outstanding quality and customer service. We also continued to strategically invest in critical long-term initiatives around advanced technology, digital transformation, and IT capabilities. The inauguration of our new Innovation Center represents an important milestone as we strive to cultivate and integrate emerging technology innovations, enhancing the overall value proposition and experience for our customers. Our unwavering commitment to investing in the future reflects our long-term confidence in driving sustained growth, expanding market share, and providing customers with a diverse array of compelling options – all while ultimately delivering value for our shareholders.”

Stember said the timing of WGO’s recovery is still uncertain.

“Following yesterday’s Q1 results, we maintain our Neutral rating on WGO,” the analyst said. “Winnebago should be the first OEM to come out of an RV recession, on a re-acceleration of share gains, which has already commenced, and given demonstrated expense management. However, weak retail demand and dealer reluctance to take on inventory are creating near-term consternation for all RV market players. As a result, we are remaining on the sidelines and
maintain our Neutral rating with a $70 PT.”

Stember thinks WGO will post EPS of $6.00 on revenue of $3.24-billion in fiscal 2024. He expects that those numbers will improve to EPS of $6.98 on a topline of $3.49-billion the following year.

“Our price target of $70 is 10x our FY25 adjusted EPS estimate,” the analyst concluded. “Impediments to our price target include weaker-than-expected U.S. economic activity, ongoing headwinds to consumer spending, and continuing supply chain constraints.”