On Thursday, Winnebago Industries (NYSE:WGO) sustained its Neutral rating with a consistent price target of $70.00, following the release of its second-quarter earnings for fiscal year 2024, which ended in February.
The recreational vehicle manufacturer reported an adjusted earnings per share (EPS) of $0.93, surpassing both the low-end analyst estimate of $0.68 and the consensus expectation of $0.85. However, this performance marks a significant drop from the $1.88 EPS recorded in the same quarter of the previous year, reflecting a 51% decline.
Winnebago's total sales for the quarter experienced a 19% decrease, landing at $704 million, yet this figure came in $97 million higher than forecasted. The dip in sales was attributed to a combination of reduced RV production activity and increased discounting, which impacted the company's sales leverage throughout the quarter. Consequently, the operating margin for the quarter decreased by 340 basis points, settling at 5.8%.
The company's latest financial results highlight the challenges faced in the RV industry, characterized by lower production and heightened discounting strategies.
Despite the better-than-expected sales figures, the significant decline in EPS and operating margin prompted Roth/MKM to maintain a cautious stance on Winnebago's stock.
Winnebago Industries' current financial standing reflects the broader economic pressures on discretionary spending, particularly within the recreational vehicle market. The company's performance in the second quarter of fiscal year 2024 serves as an indicator of the industry's ongoing adjustments to market conditions.
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