Investors are cautiously optimistic heading into Winnebago's (WGO -1.28%) earnings report this week. The recreational vehicle giant faced unprecedented demand pressures during the early weeks of the pandemic, but production appears to have picked right back up since then. The company might even be positioned for faster sales gains as consumers shift spending toward vacationing in outdoor environments that are closer to home.

With those bigger-picture trends in mind, let's look at the key metrics to follow on Oct. 21.

The Winnebago Vita model recreational vehicle sits out in a field under a cloudy sky.

The 2020 Winnebago Vita. Image source: Winnebago.

The sales trends

Understandably, the biggest investor concerns heading into Wednesday's report surround demand. Sales dove 41% year over year in the prior fiscal quarter, which was dominated by COVID-19 dealership closures. Yet CEO Michael Happe and his team said at the time that the May selling month brought a "strong rebound in dealer demand."

That boost was reflected in surging order backlog, which jumped 87% for its towable products and doubled for its motorized RV division. We'll find out this week how well demand held up, and whether Winnebago handled the manufacturing rebound without incident. Look for Happe to update shareholders on the company's market-share position, too. Winnebago has been consistently gaining ground there, including by pushing market share to 11.7% of the industry through the April contraction.

Unusual costs

This week's report might have an unusual amount of noise surrounding profitability. In addition to new pandemic-related costs, Winnebago had to completely restart much of its manufacturing and supply chains in the period. It is also dealing with temporary charges related to integrating its recently acquired Newmar brand.

All these challenges have most investors predicting a profitability decline for the fiscal fourth quarter, with earnings falling to about $0.90 per share from $1.03 per share a year ago despite all the extra sales being added from the Newmar business. Management should make some comments about underlying profitability trends, though, that strip out those temporary issues.

Winnebago enjoyed roughly steady profitability, with operating income landing at just under 9% of sales in both fiscal 2019 and 2018. That figure will drop in this report, but it's not clear yet by how much.

Looking ahead

The start of a new fiscal year is a great time to look ahead to industry conditions over the next 12 months. Winnebago will have an especially cloudy outlook in this announcement, though, as the economy could contract sharply from pandemic pressures in late 2020 and into 2021. Such a move might be painful for the RV industry and other consumer discretionary categories.

But after stressing that caution sign, Winnebago management may make some positive predictions about demand trends for the company's recreation products. A high order backlog might point to a strong start to fiscal 2021. The company is entering the year with its strongest portfolio to date, too, as it covers luxury motorized RV products, towable camping units, and boating products.

Given its dominant industry position, those assets should give Winnebago a good shot at securing more than its fair share of any growth that the RV niche experiences over the next few years.