What happened

Shares of Winnebago Industries, Inc. (NYSE:WGO) were moving higher today after the recreational-vehicle maker posted a strong third-quarter earnings report that easily beat analyst estimates. As of 12:31 p.m. EDT, the stock was up 12.4%.

So what

Thanks to continuing growth in its towables division following its 2016 acquisition of towables-maker Grand Design, Winnebago saw revenue growth of 18% in the period, to $562.3 million, breezing past expectations at $541 million. Gross margin, a key metric in the industry, improved 30 basis points, to 15.2%, and operating income jumped 38.5%, to $48.3 million. On the bottom line, earnings per share surged from $0.61 to $1.02 as the company took advantage of the tax reform law and its tax rate fell from 34.6% to 26.4%.

RV coming down mountain.

Image source: Getty Images.

CEO Michael Happe said: "New product performance, our evolving portfolio mix, and agility in managing cost pressures all contributed nicely to our third quarter results. The Towable segment saw strong organic top-line growth and increased profitability, in addition to delivering another period of retail market share expansion."

Now what

Management didn't give specific guidance for the current quarter, but noted increasing input costs would continue from the third quarter. Winnebago also made another acquisition after the third quarter, taking over Chris-Craft, a leader in recreational boating. This shows another way the company is diversifying beyond its core RV segment.  

With the economy at full strength, baby boomers entering retirement, and millennials embracing #Vanlife, the future continues to look promising for Winnebago.

Jeremy Bowman owns shares of Winnebago Industries. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.