It would be easy to take a look at the economy as it sits, with the employment picture shaky all over—more so in some places than in others—and think that this is a bad time to buy a second home on wheels. Yet the market has resoundingly rejected this notion, as demonstrated by the recent performance at
Winnebago (NYSE:WGO), which shows there's a very brisk interest in vacation homes that vacation with you.
Moving on Along With the Numbers
Winnebago brought out not only its fiscal fourth-quarter numbers, but also its full-year figures, and the numbers absolutely went well for the company. Winnebago is demonstrating that it's certainly one of the leading firms in the recreational vehicle (RV) market space, thanks to its name recognition and quality product.
The company posted quarterly revenues up 39.1% over the same time last year, which was primarily driven by frantically increasing consumer demand. The company brought in $737.8 million in revenue for the fiscal fourth quarter, which measures wonderfully against the $530.4 million seen at the same time last year. Gross profit did similarly well, posting $122.5 million against the $83.2 million seen back in 2019. Net income posted similar gains, up 33.2% in the fourth quarter to reach $42.5 million.
Better yet, gains were seen across several segments of the company's profit picture, suggesting that this isn't a temporary phenomenon or one generated by some kind of fad-response. The company's acquisition of Newmar a little under a year ago generated $126.3 million for Winnebago, and the company saw some particularly strong gains from its market segment of towable RV models, suggesting that customers weren't always ready for a major investment in the RV space.
Surviving a Pandemic
When discussing the company's full-year figures, it was of course impossible to examine them effectively without discussing COVID-19. Indeed, there was an impact, as the company's full-year net income was down 45% against last year's, bringing in $61.4 million against last year's total of $111.8 million. Additionally, the company's net profit was hit by increased expenses related to interest, as the company ended a term loan, using a bond issue to refinance it.
For those who pay close attention to the issues of debt and revenue, the company had total outstanding debt of $512.6 million, with working capital of $413.2 million. The company's CEO and president Michael Happe noted that the figures seen were the result of several factors, including the team's “resolve”, an improved customer experience created in conjunction with channel partners, and a growing interest in still being able to vacation, despite COVID-19 shutting down or otherwise sharply curtailing many known vacation destinations.
Pack Up Some Winnebago Stock
A little over two weeks ago, we had a projection that said Winnebago would prove a 2021 winner, and thanks to the numbers we've seen from the company's full-year projections, that seems to be the case. Our latest research on the topic supports this assessment wonderfully, as there's currently a consensus rating of “buy” on the stock.
In fact, the consensus has changed substantially just in the last 30 days. Back then, the company had three “hold” ratings and four “buy” ratings on it, good enough for a buy. Now, the company has one “hold” and six “buy”, suggesting a fairly major shift in consensus. Admittedly, the price target slipped a bit, going from $72 to $70.14, but given that six months ago the price target was $47.17, that's still a big gain.
Winnebago, and other RV makers, have one major advantage in their favor: they have a functional use case no matter what shape the economy ultimately takes. In good times, the product becomes a way to get out and see the country without having to find hotel rooms. This is especially handy with camping vacations, which proved particularly popular in the midst of COVID-19. In bad times, meanwhile, the product becomes an emergency backup house; if one is evicted for non-payment of rent—a problem whose full impact will likely be seen in 2021—or mortgage, one still has a place to live.
When it's possible to sell a product no matter what the economy looks like, the end result tends to be good for the company that sells it. While there's no shortage of competitors in this space, Winnebago still benefits from its worldwide name recognition and longstanding reputation, making it the flagship buy for anyone who wants to get in on the RV market.
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