Winnebago Industries Stock Upgraded (WGO)

NEW YORK ( TheStreet) -- Winnebago Industries (NYSE: WGO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • WGO's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WGO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, WGO has a quick ratio of 1.76, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 229.8% when compared to the same quarter one year prior, rising from $1.20 million to $3.94 million.
  • WINNEBAGO INDUSTRIES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, WINNEBAGO INDUSTRIES increased its bottom line by earning $0.40 versus $0.35 in the prior year. For the next year, the market is expecting a contraction of 31.3% in earnings ($0.28 versus $0.40).
  • The gross profit margin for WINNEBAGO INDUSTRIES is currently extremely low, coming in at 8.50%. Regardless of WGO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WGO's net profit margin of 2.50% compares favorably to the industry average.

Winnebago Industries, Inc. manufactures and sells recreation vehicles primarily for leisure travel and outdoor recreation activities. The company has a P/E ratio of 52.9, above the average automotive industry P/E ratio of 49.9 and above the S&P 500 P/E ratio of 17.7. Winnebago has a market cap of $262.8 million and is part of the consumer goods sector and automotive industry. Shares are up 19.9% year to date as of the close of trading on Friday.

You can view the full Winnebago Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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