Anyone interested in a Winnebago? Mr. Market has apparently soured on every boomers favorite retirement plan, with shares falling from $77 in early January to $57 today. That 25% haircut seems steep for a company that has been growing like gangbusters for over a decade. WGO has grown revenues by 700% since 2012, and tripled net profit margins to nearly 8%. While EPS, at $9.49/sh, is well above the five year average of $3.85, shares are still trading at a PE of under 15 at these normalized earnings. VL sees them earning over $12/sh in 2024-26, so they are selling at a forward PE of under 5 assuming this goal is met.

While not a screaming bargain, the shares look reasonably priced, although a recession could take the price lower. Thoughts?



I suspect the market’s concern is that the growth in the last several years, while wonderful, mostly took place during the pandemic.
Earnings are great lately, but they’re about triple what a decade trend would have led you to expect, and the revenue situation is probably not so different.
What will the new normal be?

As a hint, pre-pandemic all time peak rolling EPS was about $3.50 around 2019-Q3.
If things revert to that, it’s nice enough, but today’s price is not obviously cheap in the conventional sense.

I have no idea about their outlook, just mumbling about why the price might be down.

But hey, I’m well known to like 'em cheap.
I own some ADS. Currently trading at just under 4.5 times consensus earnings next year.
At that level, it’s priced like a call option. But it never expires, costs nothing to exercise, and pays a dividend.
Unfortunately, the market absolutely hates them.
One thing about really cheap stuff, though: the price tends to under-react to new bad news and react strongly to new good news.



I share your concerns about buying at a cyclical high in earnings. They recently bought Chris Craft and Barletta Pontoon Boats (https://www.barlettapontoonboats.com/) with revenues of nearly $80 million in the first quarter. It looks like the new marine segment will soon make up 10% of revenues. I like the attempt to broaden the revenue stream, but getting into a new line of business is always risky. At normalized EPS of ~$3.50 they are trading at a historically reasonable PE of 16.5. VL seems to have some ambitious assumptions about future growth, with a 3-5 year price range of $145-220. I’ll be watching this one closely.

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