Winnebago Industries Announces Pre-Earnings Share Repurchase Plan

WGO reports its third-quarter earnings on Wednesday

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Winnebago Industries, Inc. (NYSE:WGO) is an American manufacturer of outdoor lifestyle products under the Winnebago, Grand Design, Chris-Craft, Newmar, and Barletta brands, which are used primarily in leisure travel and outdoor recreation activities. Winnebago builds motorhomes, travel trailers, fifth-wheel products, pontoons, powerboats, and commercial community outreach vehicles. WGO was last seen trading up 2.5% at $71.77.

On Oct. 13, the board of directors at Winnebago Industries approved a new share repurchase authorization of up to $200 million of the company’s common stock. The newly announced authorization replaces the previous $70 million share repurchase program. As part of the same press release, Winnebago Industries also announced plans to issue its third-quarter earnings before the market opens on Wednesday, October 20.

Winnebago has outperformed earnings expectations on all four of its most recently released earnings reports. For the third quarter of 2020, the outdoors company beat analysts’ estimates by a margin of $0.52, reporting an EPS of $1.45. For Q4, Winnebago's EPS increased to $1.69, beating expectations by a margin of $0.71. For Q1 of 2021, WGO had another increase in earnings, rising to $2.12 per share. The outdoor lifestyle company beat estimates by a margin of $0.71 once again. Most recently, for Q2, Winnebago reported an EPS of $2.16 and beat expectations by a margin of $0.39. Analysts have the company’s EPS coming in at $2.01 for the upcoming report.

Winnebago stock has increased about 30% in price year-over-year and WGO is trading up 61% since bottoming at a four-year low of $44.33 last November. Shares of WGO have grown 20% year-to-date, but Winnebago stock is currently down 18% from its record high of $87.53 reached in mid-March. Moreover, Winnebago Industries offers a forward dividend of $0.72 and a dividend yield of 1.03%.

Short interest has bee climbing on WGO, up 3.4% during the past two reporting periods. This accounts for 10.9% of the stock's total available float and would take more than seven days for shorts to buy back, at the equity's average pace of daily trading. 

From a fundamental point of view, Winnebago stock is a decent option for value investors. WGO trades at low price-earnings ratio of 10.16 and has an attractive forward price-earnings ratio of 9.76. In addition, Winnebago Industries has maintained a relatively good growth rate in recent years, in spite of some setbacks. Winnebago Industries has a standard balance sheet with $406 million in cash and $550 in total debt. Overall, Winnebago stock has limited growth potential but definitely remains an intriguing long-term play at WGO's current valuation.

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