Winnebago (WGO) is up 6% after beating second quarter estimates this morning. Revenue rose 64% and gross margins expanded 210 basis points to 13.1%, a ten year high, thanks to the inclusion of the Grand Design business.
Winnebago sells motorized and towable recreational vehicles (RVs).
The company acquired towable RV business Grand Design late last year. As a result, towable sales rose over 700% and now account for a 46% sales mix. Market share is up to 5% versus 1% last year, but the company is targeting double digit share in the segment. Grand design sales were up 50% year-over-year while legacy Winnebago towable sales rose in excess of 36%.
The motorized segment isn't performing as well. Motorized sales were down 3%. Shipments were down 4% in the Class A segment and 1% in the Class C segment. Winnebago is working to right the (RV) ship in this segment but will likely coninue to underperform the market in coming quarters.
WGO gapped up on the strong print but pulled back at the open and then bounced off support near the $28 level.
The RV industry is expected to have another record year. Thor (THO) is the leader in the space. Both stocks trade a <9x EV/EBITDA after this recent pullback following a strong performance in 2016.