Time to buy Winnebago Industries after Q3?

Winnebago Industries, Inc. (WGO) manufactures and sells recreational vehicles and marine products primarily for use in leisure travel and outdoor recreational activities. The stock has lost 35.2% year-to-date to close yesterday’s trading session at $48.56. Moreover, it is currently trading 39.5% below its 52-week high of $80.30, which it reached on October 4, 2021.

However, WGO reported strong third quarter results, with revenue and adjusted EPS for the quarter beating Wall Street estimates by 21.1% and 37.2%, respectively. Additionally, its board of directors recently paid a quarterly cash dividend of $0.18 per share, representing a 50% year-over-year increase. Additionally, it completed record share buybacks of $70 million during the third quarter. Thus, the stock’s short-term outlook looks promising.

Here’s what I think could influence WGO’s performance in the coming months:

Strong finances

WGO’s net revenue increased 51.8% year-over-year to $1.50 billion in the third quarter, which ended May 28, 2022. The company’s adjusted EBITDA increased grew 74.7% year-over-year to $191.70 million, while its net profit was $117.22. million, representing a 64.4% year-over-year increase. Additionally, its adjusted EPS came in at $4.13, up 84.4% year-over-year.

Favorable analyst estimates

For fiscal 2022, analysts expect WGO’s EPS and revenue to grow 59.1% and 36.4% year-over-year to 13.60 and 4, respectively. $95 billion. Additionally, its EPS is expected to grow 15% annually over the next five years. Additionally, Wall Street analysts expect the stock to hit $63.43 in the near term, indicating a 30.6% upside potential.

Extended valuation

In terms of forward EV/EBIT, WGO’s 3.18x is 71.7% below the industry average of 11.22x. Likewise, its forward non-GAAP P/E of 3.58x is 67.4% below the industry average of 10.98x. In addition, the stock is futures P/S of 0.31x is 61.2% lower than the industry average of 0.80x.

High profitability

In terms of 12-month ROTC, WGO’s 21.22% is 197.5% higher than the industry average of 7.13%. Likewise, its 12-month ROTA of 16.16% is 191.5% higher than the industry average of 5.54%. Additionally, the stock’s trailing 12-month asset turnover rate of 2.19% is 114.1% higher than the industry average of 1.02%.

POWR ratings are promising

WGO has an overall rating of B, which equates to a purchase in our POWR Rankings system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary scoring system also rates each stock against eight different categories. Of these categories, WGO has an A rating for value, in line with its lower-than-industry valuation ratios.

WGO also has a B rating for growth, in line with its revenue and profit growth estimates.

Beyond what I said above, we also gave WGO ratings for Momentum, Stability, Quality, and Sentiment. Get all the WGO ratings here.

WGO is ranked #13 out of 66 stocks in the Automobile and vehicle manufacturers industry.

Conclusion

WGO posted impressive third-quarter fiscal results despite semiconductor shortages and supply chain challenges. It is well positioned to benefit from strong demand for decarbonization and progressive government policies. So it might be a good idea to buy the dip in the stock.

How does Winnebago Industries, Inc. (WGO) compare to its peers?

WGO has an overall POWR rating of B. You can also check out these other auto and automaker sector stocks with an A (Strong Buy) or B (Buy) rating: Daimler AG (DDAIF), Honda Motor Company, Ltd. (HMC) and Mazda Motor Corporation (MZDAY).


WGO shares were trading at $49.10 per share on Friday afternoon, up $0.54 (+1.11%). Year-to-date, the WGO is down -33.86%, compared to a -19.92% rise in the benchmark S&P 500 over the same period.

About the Author: Nimesh Jaiswal

At Nimesh Jaiswal a fervent interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving the price of a stock is the key approach he follows while advising investors in his articles. After…

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