➡️ This is a step-by-step stock review to determine if Winnebago (WGO) stock is a good buy. In this article, we’ll help you understand the company, where the company is going, the competition, and the leadership. This way you can make a more confident investment decision.
Winnebago is a leading manufacturer of outdoor lifestyle products. They were founded in 1958, currently have about 2,800 employees, and are based out of Forest City, IA.
Table of Contents
- Step 1: Tykr Rating
- Step 2: Winnebago Company History
- Step 3: Winnebago Business Model
- Step 4: Winnebago News
- Step 5: Winnebago Competition
- Step 6: Winnebago 4Ms
- Step 7: Is Winnebago Stock a Good Buy?
Step 1: Tykr Rating
➡️ Goal: When you look at a stock, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: On Sale
- Score: 56/100
- MOS: 90%
- Share Price: $57
- Fair Value: $286
Step 2: Winnebago Company History
➡️ Goal: It’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- In 1958, Winnebago opened in Forest City, IA with 17 employees under the name Modernistic Industries.
- In 1960, they rebranded to Winnebago after the river that flows through Forest City.
- In 1967, they sold their first motorhome which was built on the chassis of a Ford. They introduced an assembly line process that allowed them to sell motorhomes at half the price of the competition.
- In 1970, Winnebago goes public on the New York Stock Exchange. It became the top performer in 1971, with a return of 470%.
- In 1975, Winnebago started introducing buses, farm wagons, helicopters, and the Itasca motorhome line.
- In 1980, fuel efficiency and streamlined styling became a key driver behind an array of models throughout the 1980s.
- From 1958 through 1986, Winnebago built 200,000 units.
- In 1998, Winnebago achieved three major milestones including a 40th anniversary, 300,000 units produced, and record sales.
- In 2001, Winnebago topped both the Class C and Class A sales charts for the first time in 20 years.
- In 2004, Winnebago achieved its first annual revenue of over $1B.
- In 2010, Winnebago buys SunnyBrook RV, to expand its RV product line.
- In 2016, Winnebago buys Grand Design RV, to expand its RV product line.
- In 2018, Winnebago buys Chris-Craft, to expand its luxury boat line.
- In 2019, Winnebago buys Newmar Corporation, to expand its luxury RV division.
- In 2021, Winnebago buys Barletta, to expand its pontoon and tritoon boat line.
Step 3: Winnebago Business Model
How does Winnebago make money?
➡️ Goal: It’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Winnebago has five primary brands.
- Winnebago – RVs, campers, vans, and trailers. Prices range from $40K up to $500K.
- GrandDesign – Campers. Prices around between $30K and $40K.
- Chris-Craft – Inboard and outboard boats. Prices range between $200K and $800K.
- Newmar – RVs. Prices range between $200K and $1.6M.
- Barletta – Pontoon and tritoon boats. Prices range between $40K and $200K.
All five product lines are sold through channel partners or in the retail industry, you would call these distributors.
Winnebago products are available for purchase in the US and Canada.
Step 4: Winnebago News
➡️ Goal: It’s important to highlight important company-specific news as well as industry-specific news over the last month and year. We don’t need daily news on a company to make buy or sell decisions because we’re investors, not traders. Overall, we want sufficient news to understand where a company and industry are heading over the next year or few years.
In this article from Seeking Alpha, CEO Michael Happe stated that Winnebago has made three big improvements since pre-covid.
- Revenue has significantly increased due to the expansion of additional revenue streams through the acquisition of Newmar (RVs) and Barletta (Pontoon and tritoon boats).
- All product lines have become more profitable. This is through a combination of increasing prices and improving operations.
- In 2016, they had 3.3% of the RV market. In 2019 they increased to 9%. In 2022, they increased to 13%.
This article from fool.com lists 3 dividend stocks with payouts that jumped over 10% in 2022. Those three stocks include Humana, Winnebago, and Target. Regarding Winnebago, revenues increased by 37% in 2022 which motivated leadership to increase the dividend by 50%.
This video from CNBC talks about Winnebago announcing that they will soon manufacture electronic RVs. The video also states the product line is quite expensive for the average consumer but that hasn’t stopped consumers from financing the products they want.
The article from fortunebusinessinsights.com states that the global recreational vehicle market is expended to grow from $55.9B in 2021 to $87.89B in 2028, a CAGR of 6.7%.
This article from journalrecord.com states that Covid-19 in 2020 and 2021 created a boom for the RV industry. Travelers became less motivated to stay in hotels and instead opted for buying an RV and traveling around the US and Canada. Since Covid slowed down in 2022, RV sales have not. Due to improvements in design, comfort, and technology, people are not only traveling more with RVs but they are selling their primary residence to live in an RV full-time.
For the latest news on this stock, please login to Tykr.
Step 5: Winnebago Competition
➡️ Goal: It’s important to understand who the competitors are and how their financials rank against this company. Try to find 5 other competitors to rank against based on Score. The best way to find competitors is to Google “XYZ competition” and replace XYZ with the company name. You can also go to Tykr and click on the “Similar Stocks” tab on each stock to see similar companies in the same industry.
Winnebago
- Summary: On Sale
- Score: 56/100
- MOS: 90%
- Share Price: $57
- Fair Value: $286
- Revenue: $4.9B
Thor Industries
- Summary: Watch
- Score: 94/100
- MOS: 0%
- Share Price: $83
- Fair Value: $117
- Revenue: $16.3B
Marine Products Corporation
- Summary: Watch
- Score: 84/100
- MOS: 0%
- Share Price: $12
- Fair Value: $12
- Revenue: $298M
Brunswick
- Summary: Watch
- Score: 67/100
- MOS: 40%
- Share Price: $76
- Fair Value: $120
- Revenue: $5.8B
LCI Industries
- Summary: On Sale
- Score: 78/100
- MOS: 90%
- Share Price: $101
- Fair Value: $510
- Revenue: $4.4B
Step 6: Winnebago 4Ms
➡️ Goal: All of our homework on this company leads up to the 4M checklist. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the business, the competition, and the management. If all 4Ms pass, we should have high confidence in buying this stock.
✅ MOS: With a score of 56/100, the overall financials are pretty good but the MOS of 90% shows that Winnebago has strong upside potential.
✅ Meaning: The expansion of revenue streams since 2010 was a smart play. This allowed Winnebago to sell mid-level and luxury RVs as well as pontoon, tritoon, and luxury boats. I wouldn’t consider RVs and boats to be a need to have product like insurance, cyber security, or payment tech but it’s important o highlight that if consumers want something, they will find a way to finance it.
✅ Moat: There are some strong competitors in this industry but the acquisitions since 2010 have allowed the company to diversify its revenue streams. I’ve stated this before but a strong company worth investing in should have multiple streams of revenue. It’s wise to first optimize one revenue stream but use that momentum to expand. We saw this with Winnebago in 2004, when the company surpassed $1B in revenue. At that point, I’m sure leadership started planning their acquisition roadmap which began execution in 2010.
✅ Management: Michael Happe has served as President and CEO since 2016. Prior to working at Winnebago, he worked at The Toro Company for 19 years, serving in positions including Director of International Marketing, Managing Director, General Manager, and several Vice President roles in various divisions in the company. The Glassdoor company rating is 3.5 and the CEO approval rating is 80%. When diving into the reviews, I can see a lot of people enjoy working at Winnebago and respect Michael Happe. What I really like about Happe is his dedication to the company. Serving 19 years at one company shows impressive brand commitment. At any time, he could have jumped ship to another company with a title and pay bump. I’m excited to see where he takes Winnebago next.
If you’re interested, you may complete your own 4M checklist on this stock or other stocks by logging into Tykr.
Step 7: Is Winnebago stock a good buy?
If you’re looking for a fun stock to create diversification in your portfolio, Winnebago may be worth a look. Although this stock won’t achieve big returns like a tech company, it has returned 117% over the last four years which is an annualized return of 21%
—
The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.
If you found this stock review interesting, you may also like this review on Security National.