Why Winnebago Stock Popped After Earnings
Key Points
Winnebago missed on Q4 sales.
It missed on Q4 earnings, too.
Winnebago guided for earnings to grow as much as 24% in 2027, however.
Winnebago Industries (NYSE:WGO) stock soared 7.8% through 12:20 p.m. ET despite missing on earnings this morning.
Heading into the fiscal Q4 report, analysts had predicted Winnebago would earn $0.51 per share on sales of $665.3 million. Winnebago actually earned only $0.49 per share, however, and its sales came in light at $645.1 million.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Image source: Winnebago.
Winnebago Q4 earnings
It's unusual to see investors reacting so positively to a big earnings miss -- so what's going on here, exactly?
Winnebago's Q4 sales declined 17% year over year, and its gross profit margin suffered, slipping 30 basis points to 12.5%. Operating margins, however, improved slightly, up 10 basis points to 2.7%. Still, the big decline in revenue meant that Winnebago's earnings were destined to fall -- and fall they did, down 31% to just $0.34 per share, when calculated under generally accepted accounting principles (GAAP).
(The $0.49 per share "profit," you see, was non-GAAP.)
What's next for Winnebago stock
Winnebago's full-year results as bad. Revenue declined only 3%, to $2.7 billion. Earnings per share increased 33%, to $1.21 per share. At a share price of $25, that works out to a P/E ratio of less than 21x on Winnebago stock.
But is that cheap enough to make Winnebago stock a "buy?"
That depends. Turning to guidance, Winnebago management forecast sales to be flat to up slightly this year -- $2.65 billion or better. The earnings forecast shows a wide range of potential outcomes, $0.90 to $1.50 per share. At the midpoint, that implies about a $1.20-per-share profit, which would be flat against fiscal 2026.
If Winnebago succeeds in maxing out its forecast, however, well, $1.50 per share would be 24% year-over-year growth -- plenty fast to justify a 21x price-to-earnings ratio. Add in a fat 6.2% dividend yield, and Winnebago stock could be a winner in 2027.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Winnebago Industries. The Motley Fool has a disclosure policy.