Analyst Note| David Whiston, CFA, CPA, CFE |
Winnebago Industries reported an outstanding fiscal 2021 second quarter, and we are raising our fair value estimate to $66 per share from $59. The change is from the time value of money and stronger fiscal 2021 and 2022 results modeled, given how fiscal 2021 is unfolding. The firm’s RV backlog at Feb. 27 was $3.0 billion compared with $725.3 million at the end of February 2020. This impressive demand, our expectation of continued strong demand as the pandemic results in Americans seeking more outdoor experiences, and the company’s continued cost-reduction efforts in restructuring the motor home segment led to the increase. We see risk of supply chain problems for a variety of parts getting worse as fiscal 2021 continues, and the fiscal third quarter will be the last weak year-over-year comparable before the pandemic-induced RV boom began in 2020, but we think the balance sheet and liquidity are strong and we see the company’s future as bright. CEO and president Mike Happe said he’s seeing no indication that first-time RV buyers from 2020 are exiting the outdoor lifestyle, and although we think demand will slow eventually, we don’t see the slowdown happening in fiscal 2021.