The recreational vehicle (RV) industry suffered a decline in sales last year as consumers put their discretionary spending on hold. But the easing of pandemic restrictions due to speedy progress in COVID-19 vaccination, and shifting recreational preferences by consumers toward outdoor activities, have fueled the industry’s recovery this year. RV shipments are projected to reach a new high in 2022, generating a 4% rise in 2021. In addition, the global market for recreational vehicles is expected to reach $68.1 billion by 2026, registering a 2.7% CAGR.
Although shares of micro-mobility leader Helbiz, Inc. (HLBZ) surged more than 190% in price yesterday on the news of its streaming partnership with Amazon (AMZN), the company’s unstable financials and bleak growth potential may cause the stock to retreat in the near term. In its last reported quarter, HLBZ’s loss from operations increased 152.8% to $500,340, and its net loss grew 168.5% to $518.200. Furthermore, analysts expect its EPS to decline at a 15.6% rate per annum over the next five years. Also, its EPS is expected to remain negative until at least 2022.
Conversely. we think industry participants BRP Inc. (DOOO), Camping World Holdings, Inc. (CWH), and Winnebago Industries, Inc. (WGO), with solid sales growth and stable financials, are better positioned to cash in on the industry’s rebound and deliver solid returns in the near term.
BRP Inc. (DOOO)
Headquartered in Valcourt, Canada, DOOO manufactures snowmobiles, all-terrain vehicles, motorcycles, and personal watercraft. The company operates in two segments: Powersports; and Marine. DOOO’s products include Ski-Doo and Lynx snowmobiles, Can-Am ATVs and motorcycles, Sea-Doo personal watercraft, and Rotax engines.
Last month, DOOO’s Sea-Doo launched its all-new “2022 Sea-Doo Switch”, which is a pontoon boat with Sea-Doo’s features. This innovation, with its adaptable features, should help DOOO attract recreational water lovers.
DOOO’s revenue for its fiscal second quarter, ended July 31, 2021, increased 54.4% year-over-year to CAD1.9 billion ($1.49 billion). The company’s gross profit grew 129.5% from the year-ago value to CAD570.1 million ($445.73 million). Its net income rose 68.8% from the prior-year quarter to CAD212.9 million ($166.45 million). Also, the company’s EPS increased 72% year-over-year to CAD2.46 ($1.92).
DOOO’s revenue is expected to increase 31% year-over-year to $6.18 billion in its fiscal period ending January 2022. Also, the company has an impressive earnings surprising history; it surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, its consensus EPS for its fiscal period ending January 2022 represents a 72.7% increase. Furthermore, the stock has gained 38.1% over the past nine months and 82.2% over the past year.
DOOO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Sentiment. We’ve also graded DOOO for Value, Momentum, Stability, Quality, and Growth. Click here to access all DOOO’s ratings. DOOO is ranked #9 of 62 stocks in the Auto & Vehicle Manufacturers industry.
Click here to check out our Automotive Industry Report for 2021
Camping World Holdings, Inc. (CWH)
CWH sells recreational vehicles (RVs), recreational vehicle parts, recreational vehicle services, and supplies for camping. The Lincolnshire, Ill.-based company operates through two segments: Good Sam Services and Plans; and RV and Outdoor Retail. In addition, it runs 120 retail service locations in 36 states and markets its products through e-commerce websites.
Last month, CWH announced an expansion plan for its national footprint with the opening of 20 or more new greenfield locations over the next three calendar years, along with strategic acquisitions. The company believes that these greenfield locations will help it serve 350 to 450 bays while growing the Good Sam customer base and expanding the market for Good Sam products and services.
For the second quarter, ended June 30, 2021, CWH’s total revenue increased 28.3% year-over-year to $2.06 billion. The company’s income from operations grew 50% from its year-ago value to $304.97 million. Its net income rose 50.8% from the prior-year quarter to $246.08 million. Also, the company’s EPS increased 51.3% year-over-year to $2.33.
Analysts expect CWH’s revenue to increase 23.3% year-over-year to $6.72 billion in its fiscal year 2021. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Moreover, its EPS is expected to increase by 67.2% in the current year. Over the past nine months, the stock has soared 29.6% in price.
CWH’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has an A grade for Value, and a B for Momentum and Quality.
In addition to the POWR Rating grades I’ve just highlighted, one can see CWH’s ratings for, Stability, Growth, and Sentiment here. CWH is ranked #18 of 35 stocks in the A-rated Athletics & Recreation Industry.
Winnebago Industries, Inc. (WGO)
WGO is a Forest City, Iowa-based manufacturer of outdoor lifestyle products. It builds motorhomes, travel trailers, fifth wheel products, and boats with multiple facilities under the Winnebago, Grand Design, Chris-Craft, and Newmar brands. The company is also involved in the original equipment manufacturing of parts for other manufacturers and commercial vehicles.
This month, WGO’s Winnebago Specialty Division introduced the Winnebago Roam for people with mobility challenges. This new vehicle has a unique class-B RV design with a wheelchair lift and provides all functions required for comfortable traveling.
WGO’s net revenues increased 138.7% year-over-year to $960.74 million in its fiscal third quarter, ended May 29, 2021. The company’s gross profit grew 429.6% from its year-ago value to $169.61 million. Its net income came in at $71.3 million, versus a $12.35 million net loss in the third quarter of 2020. Also, the company’s EPS amounted to $2.05, compared to a $0.37 loss per share in the prior-year quarter.
For its fiscal year 2021, analysts expect WGO’s revenue to increase 49.8% year-over-year to $3.53 billion. It has surpassed the consensus EPS estimates in each of the trailing four quarters. The company’s EPS is estimated to increase 206.6% in the current year. The stock has gained 34.6% in price over the past year.
WGO has a B grade for Quality and Growth in our POWR Rating System. Click here to see the additional POWR Ratings for WGO (Value, Momentum, Stability, and Sentiment). In the Auto & Vehicle Manufacturers industry, WGO is ranked #20.
Click here to check out our Automotive Industry Report for 2021
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DOOO shares were trading at $95.59 per share on Wednesday afternoon, up $2.79 (+3.01%). Year-to-date, DOOO has gained 45.27%, versus a 18.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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