After crushing Wall Street estimates for two quarters running, Monaco Coach
What analysts say:
- Buy, sell, or waffle? The eight analysts following the company are largely agnostic. One thinks the stock is a buy, but the other eight all vote hold.
- Revenues. On average, they expect sales to come in 5% stronger this quarter than a year ago, at $310.8 million.
- Earnings. Sadly, they think the firm's loss doubled to $0.24 per share in Q3.
What management says:
Monaco gave us a peek at Thursday's news a couple of weeks ago, when it released preliminary Q3 results. That's a common tactic used to soften the blow when bad news ultimately arrives, and true to form, this news was pretty bad. According to the press release, Monaco expects its loss will come in at $0.23-$0.25 per share.
Before you extol the amazing accuracy of the analysts' predictions, though, flip over to Yahoo!'s estimates page. There, you'll see that up until a month ago (i.e., just before Monaco issued its preliminary report), most of these same analysts thought that the company would report breakeven results on Thursday. In illustration of which, you'll notice that the analysts' revenue prediction seriously overstates what Monaco itself now expects to report: $290 million to $294 million in sales.
What management does:
As bad as the table below (which shows margin trends over the last 18 months) looks, the numbers cited above are going make it look uglier still come Thursday. Rolling gross margins are still about a point below where they were a year ago; operating profitability is just half what it was; and the rolling tally of net profitability, which looked to be stabilizing last quarter, is set to take another dive.
|
Margins % |
4/05 |
7/05 |
10/05 |
12/05 |
4/06 |
7/06 |
|---|---|---|---|---|---|---|
|
Gross |
11.8 |
11.3 |
10.3 |
10.1 |
10.6 |
10.3 |
|
Op. |
4.6 |
3.5 |
2.0 |
1.7 |
2.0 |
1.8 |
|
Net |
2.2 |
1.4 |
0.4 |
0.2 |
0.4 |
0.4 |
One Fool says:
The earnings warning contains a host of information for investors in this sector generally, not just Monaco owners in particular. For example, the company cited Recreation Vehicle Industry Association data showing that wholesale Class A motorhome shipments are down 17.7% year-to-date industrywide. (For comparison, industrywide retail sales are down 16.9%, and Monaco's own wholesale Class A shipments are tracking toward 17.4% down.) According to Monaco, weakness is also spreading from the motor-home category to towable RVs, where inventories are growing in tandem with price discounts aimed at moving them.
CEO Kay Toolson noted that "falling fuel prices, recent increases in consumer confidence, and a steadying of interest rates" bode well for a revival in the industry, but cautioned that "we have not yet seen these factors translate into increased dealer orders." Until the pace picks back up again, investors in Monaco, and elsewhere in this sector, can look forward to more news like this: Lower sales volumes mean less efficient utilization of fixed assets, and slumping gross and operating margins.
So how can we end this Forecast on a happy note? How about with this: Monaco CFO Marty Daley noted that, its other troubles aside, the company has at least been able to work down its accounts receivable and inventory levels by about $16 million each. And in this industry environment, you take what good news you can get.
Competitors:
-
Coachmen
(NYSE:COA) -
Fleetwood
(NYSE:FLE) -
National RV
(NYSE:NVH) -
Parker-Hannifin
(NYSE:PH) -
Winnebago
(NYSE:WGO) -
Thor
(NYSE:THO)
And how have these competitors been faring lately? Find out in:
It's been a bad year for Monaco, but it could still be a good year for your portfolio. Get powerful investing advice with a 30-day free trial to the Foolish newsletter of your choice.
Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.
