Monday, KeyBanc reiterated its Sector Weight rating on Winnebago Industries (NYSE: NYSE:WGO), maintaining its stance on the stock despite the company's reported first-quarter adjusted earnings per share (EPS) miss. The recreational vehicle manufacturer, currently trading near its 52-week low of $49.68, faced margin pressures due to softer revenue compared to consensus expectations.
With gross profit margins at 13.91% and seven analysts recently revising earnings downward according to InvestingPro data, the firm adjusted Winnebago's fiscal year 2025 adjusted EPS guidance, slightly narrowing the range to $3.10-$4.40 from the previous $3.00-$4.50, while leaving the revenue outlook unchanged.
Winnebago's earnings miss was broader than anticipated, according to KeyBanc's analysis. Management cited several factors expected to impact the company's performance, including macroeconomic pressures, a challenging retail environment, and a cautious dealer sentiment. These elements are likely to have a more pronounced effect through the remainder of the second quarter.
The stock has experienced significant pressure, with InvestingPro data showing a 30% decline year-to-date, though the company maintains strong liquidity with a current ratio of 2.58.
Despite the miss, Winnebago pointed to certain positive developments. The company noted cleaner inventory levels, the conclusion of the election cycle, and a positive turn in retail sales beginning in October, with November and the first half of December showing better internal retail tracking. These signs may indicate a more favorable second half of the fiscal year.
KeyBanc's cautious stance on Winnebago is influenced by consumer affordability concerns, which are heightened by persistent high financing rates. The firm's Sector Weight rating reflects a neutral perspective on the stock's near-term prospects, suggesting that investors maintain their current positions without increasing or decreasing their stake in the company.
In other recent news, Winnebago Industries reported a disappointing first quarter, with results falling short of analyst estimates. The recreational vehicle manufacturer posted an adjusted loss of $0.03 per share, missing the expected earnings of $0.22 per share. Revenue also decreased by 18% YoY to $625.6 million, underperforming the anticipated $690.94 million.
Winnebago attributed these results to challenging market conditions in the RV and marine sectors, marked by subdued consumer demand and hesitant dealers. The company has revised its full-year earnings guidance, now expecting an adjusted EPS of $3.10 to $4.40, while maintaining its revenue projection between $2.9 billion and $3.2 billion.
Despite a tough quarter, management is optimistic about a market recovery in the second half of fiscal 2025, citing encouraging retail trends and rising consumer confidence. As part of its capital allocation strategy, Winnebago also bought back $30 million of shares during the quarter.
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