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Here's Why Shares of Winnebago Industries Climbed 23% in May

By Scott Levine – Jun 8, 2020 at 5:42AM

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For the second month in a row, this company continued to roll in the right direction.

What happened

Extending their 60% climb in April, shares of Winnebago Industries (WGO -4.86%) ripped 23% higher in May, according to data from S&P Global Market Intelligence. In addition to news that the company would be resuming operations, a dividend hike and analyst's bullish take on the stock inspired investors to pick up shares last month.

So what

After resuming operations at its Chris-Craft and Specialty Vehicles locations in April, Winnebago drove ahead and restarted manufacturing at additional locations in the first week of May, including Newmar, Grand Design RV, and Winnebago Motorhomes. And the following week, the company resumed activities at Winnebago Towables. 

Winnebago's Horizon motorhome.

Image source: Winnebago Industries corporate website.

In conjunction with the announcement that manufacturing locations were restarting, management noted that it was "cautiously optimistic about several indicators within the outdoor industry, including an uptick in campground reservations and marina traffic in select areas, continued low gas prices and interest rates, easing of stay-at-home restrictions in some states leading to increased commerce conditions, and improved access to some state and national parks."

Investors also celebrated news that the company, which has kept an acute eye on maintaining its financial health during the COVID-19 crisis, had approved a quarterly dividend of $0.11 per share. While many companies have elected to reduce dividend payments during this period of economic uncertainty, Winnebago's news that its quarterly payout would remain unchanged was surely welcome news for shareholders.

And yet another motivating factor for investors last month came in the form of an analyst's upwardly revised price target. Maintaining a buy rating on the stock, Michael Swartz, an analyst at SunTrust, raised the price target on Winnebago's stock to $60 from $45, according to Besides its "compelling" market share, Swartz is bullish on the stock due to the company's potential to expand its margin.

Now what

Between Winnebago resuming operations at its numerous locations and management's announcement that it will continue to reward shareholders by way of the dividend, it's no surprise that shareholders cozied up to the stock last month. Of course, a bullish analyst upgrade didn't hurt, but it's important for investors to remember that analysts' time horizons are often shorter than the long-term views that we espouse. Therefore, investors would be better-served tracking what the company says when it reports third quarter 2020 earnings in the coming weeks.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Winnebago Industries, Inc. Stock Quote
Winnebago Industries, Inc.
$51.52 (-4.86%) $-2.63
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