Why This Company Is a Consistent Winner for Investors

One Company That’s Proven It Can Adapt to the MarketplaceAmid all the turmoil in capital markets, I’m reminded of all the good corporate earnings being released.

Of course, the stock market is a system of discounting future business conditions and the recent sell-off has been pronounced, but stocks have come so far over the last several years. If the catalysts were deflationary pressures among oil prices and global economic activity, a little haircut in share prices is well deserved.

One of the first businesses to show a real turnaround after the financial crisis sent stocks and the economy tanking was Winnebago Industries, Inc. (WGO).

The first thing that dries up when there’s a shock to the economy is spending on luxury items and/or non-essential products. Likewise, the recreational vehicle market is very sensitive to prevailing economic conditions. For a number of years now, however, Winnebago Industries has been on a turnaround roll.


Based in Forest City, Iowa, the company’s fourth fiscal quarter of 2014 (ended August 30, 2014) saw revenues improve a solid 15% to $246 million, up from $214 million in the same quarter last year.

The company reported that it experienced a 15% improvement in total motorhome sales. A 25% comparable gain in motorhome unit growth was offset by lower average selling prices.

Earnings came in solid with management noting particular bottom-line strength in towable recreational vehicles. Total fourth-quarter operating earnings grew 19% to $18.3 million. Net earnings grew to $12.9 million for a comparable quarterly gain of 22%, while net earnings per diluted share improved 26% to $0.48.

All in all, it was another very good financial report from Winnebago Industries and the company just reinstated its quarterly dividend ($0.09 per share), which has been on hiatus since October of 2008. (See “My Top Three Stocks in This ‘Alternative’ Housing Market Sector.”)

The company also finished its 2014 fiscal year on a strong note, with a comparable sales gain of 18% and a diluted earnings per share gain of 45% compared to fiscal 2013.

So while capital markets are likely to keep convulsing near-term, there’s a lot of reassurance in current earnings reports. So far, the numbers this current earnings season are coming in solid, with the expected currency translation affecting the bottom line.

Because investor sentiment turned with oil prices, companies are seemingly no longer able to advance on the stock market, even if they beat consensus.

We’ll probably get more correction-style trading action for another month, but given current monetary policy and the Federal Reserve’s proven proclivity to help Wall Street and the equity market, I see no reason why stocks can’t reaccelerate going into 2015.

Winnebago Industries beat Wall Street consensus with its latest earnings report (to the degree that that matters). This stock is not expensively priced and it’s due for a turnaround.

If there was any concern with the company’s latest numbers, it is with lower average selling prices and the stronger demand for less expensive motorhomes.

Management did cite that its backlog for luxury motorhomes has dropped materially. But even if lower-priced units are less profitable, the company has proven that it can adapt its manufacturing in a financially positive manner to suit its marketplace.