Stock of the Day
|
Winnebago Industries (WGO)
Winnebago Earnings Crash as RV Sales Tumble
It's not too hard to spot the trends in the automobile industry right now. With fuel prices rising, consumers are interested in purchasing fuel-efficient hybrids, and trading in their gas-guzzling SUVs. Many people are being a lot more conscientious about their driving habits as well, and trying to cut back on unnecessary driving. So Winnebago's disappointing earnings report this morning wasn't entirely unexpected, although no one was ready for just how bad it would actually be. Earnings were less than expected, and things don't look good for the future either. Will Winnebago be able to rev their engines and get back on track, or have they skidded to a halt?
|
| Daily Chart |
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
|
| Stock Analysis |
Neither analysts nor investors were very optimistic about this quarter, but even their cautious expectations weren't reached. For the third quarter, Winnebago reported that earnings fell 73% from the same quarter a year ago, falling to $3 million from $11.3 million. Revenue fell 40%, down to $140 million. Their operating income tumbled to a loss of $7 million, versus a profit of almost $15 million last year. Analysts were expecting that the company would bring in revenue of $158 million this quarter.
|
Buy Winnebago Industries for just $4
|
This last year has been hard on the company, not to mention the entire motor home industry. Winnebago's share prices, previously hovering around $30 per share, have fallen below $15. Industry-wide sales have fallen over 25%, even in March and April which is typically the big selling season for RVs. It has been predicted that motor home sales will shortly reach the lowest levels the industry has experienced since 1991. Winnebago can find some consolation in the understanding that it's not just a problem with their company; it's an issue which is affecting the entire industry. That is little solace, however, when your company is the market leader, and is struggling to survive.
|
Winnebago is trying to figure out how to respond. Back in January the company had to lay off 300 employees, and this month has already announced the loss of an additional 270 jobs. The company will also be closing their factory in Charles City, Iowa. These changes are all being made in a simple attempt to cut costs. Some of the planned restructuring, however, will have costs associated with it, and the estimated $2.5 to $5.5 million this will cost will just be another wrinkle in next quarter's financial performance.
|
The CEO of the company warns that things are looking pretty dim for the upcoming year. Other companies in the motor-home industry, such as Fleetwood Enterprises (FLE: Charts, News, Offers) and Thor Industries (THO: Charts, News, Offers), have experienced similar drops in sales in recent quarters. Everyone expects things will continue to get worse as the year goes on. One analyst has described the situation as a "reverse wealth effect" which has decreased the demand for RVs. Unfortunately for the companies, it seems like they are already doing all that they can; continuing to reduce costs as much as possible until sales begin to increase again. Unsurprisingly, Winnebago's share price has continued to fall this morning as investors digest the bad news. But until the mindset of consumers begins to change, and their willingness to purchase these large RVs increases again, there probably isn't much more that these companies will be able to do.
|
Special Offer
|
| Buy WGO for just $4
|
Profile |
Click here to view a detailed profile of Winnebago Industries.
|
|
|
|
|
Back to newsletter list
