Will Strategic Buyouts Bolster Winnebago (WGO) Q2 Earnings?

By Zacks Investment ResearchStock MarketsMar 22, 2020 11:58PM ET

www.investing.com/analysis/will-strategic-buyouts-bolster-winnebago-wgo-q2-earnings-200518302

Will Strategic Buyouts Bolster Winnebago (WGO) Q2 Earnings?

By Zacks Investment Research | Mar 22, 2020 11:58PM ET

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Winnebago Industries, Inc. (NYSE:WGO) is slated to release second-quarter fiscal 2020 results on Mar 25, before the opening bell. The Zacks Consensus Estimate for the quarter to be reported is earnings of 70 cents per share on revenues of $610 million.

The recreational vehicle (RV) maker came up with better-than-expected results in the last reported quarter on the back of higher-than-anticipated revenues from Motorhome and Towable segments. As far as earnings surprises are concerned, Winnebago — whose peers include Thor Industries (NYSE:THO) , Skyline Champion Corporation (NYSE:SKY) and LCI Industries (NYSE:LCII) — managed to surpass estimates in each of the trailing four quarters, with the average being 5.8%.

Winnebago Industries, Inc. Price and EPS Surprise

Winnebago Industries, Inc. Price and EPS Surprise

Winnebago Industries, Inc. price-eps-surprise | Winnebago Industries, Inc. Quote

Investors are expecting Winnebago to top earnings estimates this time around as well. Encouragingly, our model also indicates the same.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter fiscal 2020 earnings per share has declined by a penny over the past 60 days. The estimated figure indicates a 16.6% increase from the year-ago reported earnings. The Zacks Consensus Estimate for revenues also suggests an increase from the prior-year reported figure of $433 million.

Factors to Note

Winnebago is likely to have benefited from the strategic acquisitions of Grand Design and Newmar in the quarter to be reported. The impressive lineup of high-quality innovative products of motorized and towable RVs is anticipated to have bolstered the top line.

The Zacks Consensus Estimate for revenues from the Towable segment is pegged at $274 million, indicating an increase from $251 million recorded in the year-ago period. High appeal of the Grand Design brand across a broad customer base is expected to have aided the Towable unit. The consensus estimate for revenues from the Motorhome segment stands at $323 million, suggesting an uptick of 95.7% from the second-quarter fiscal 2019 level.TheNewmar buyout has enhanced Winnebago’s product line and dealer network, as well as revved up the motor-home segment, in turn strengthening the firm’s position in the North American RV landscape.

While the company is likely to have bore the brunt of high input costs, impressive organic sales growth and strategic deals during the to-be-reported quarter are expected to offset the same.

What the Zacks Model Says

Our proven model predicts an earnings beat for Winnebago this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +5.41%. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #3.

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Will Strategic Buyouts Bolster Winnebago (WGO) Q2 Earnings?

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