WGO - Embedded Expectations Analysis - 2020 11 12
Winnebago Industries, Inc. (WGO:USA) currently trades well below corporate averages relative to Uniform earnings, with a 10.7x Uniform P/E. At these levels, the market has overly bearish expectations for the firm, but management's confidence about demand recovery, balance sheet strength, and the Winnebago brand suggests longer-term equity upside is warrantedSpecifically, management is confident demand has fully recovered and that the balance sheet is strong. In addition, they are confident their Winnebago-branded products are contributing to margin growth and that their inventory correction lowered input costs. Moreover, management is confident in their ability to execute their sustainability goals and in the potential of their Motiv investment
Given management's confidence about demand recovery, balance sheet strength, and the Winnebago brand, market expectations are far too bearish and equity upside is warranted for WGO
Winnebago Industries is a manufacturer with a portfolio of recreation vehicles and marine products used primarily in leisure travel and outdoor recreation activities. The company's reportable segments include: Towable, which is comprised of products which are not motorized and are generally towed by another vehicle as well as other related manufactured products and services; and Motorhome, which is comprised of products that include a motorized chassis as well as other related manufactured products and services. The company's subsidiary, Chris-Craft USA, Inc., manufactures and sells boats in the recreational powerboat industry through a network of independent authorized dealers.
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