After missing consensus analyst earnings badly two months ago, Winnebago (NYSE:WGO) is gearing up for another run at Wall Street. When the RV maker releases its first quarterly report of fiscal 2007, will the stock rev or stall?

What analysts say:

  • General consensus. Five analysts still follow Winnebago. They give it two buys and three holds.

  • Revenues. Quarterly sales are expected to fall 9% versus last year's Q1. $211.6 million is the target.

  • Earnings. Profits are predicted to decline 27% to $0.32 per share.

What management says:
Q4 was a quarter of mixed results for Winnebago. You can read the full rundown of the results in Ryan Fuhrmann's write-up, but here are the highlights: On the plus side, Winnebago introduced "value-priced 2007 Winnebago Access and Itasca Impulse Class C motor homes," sales of which helped the firm grab a 25.1% share of the Class C market, up 580 basis points from last year. Not bad in a soft RV market. On the minus side, sales of Class C motor homes, "value-priced" as they were, constituted a "significant shift in mix to lower-priced products" and thereby hurt margins.

Looking forward, Winnebago sees no "immediate change in motor home buying patterns and anticipate[s] continued softness throughout [its] first and second fiscal quarters."

What management does:
Declining sales, and of lower-priced products at that, have continued to depress Winnebago's margins, which at any level you choose to consider -- gross, operating, or net -- are at their lowest levels in at least 18 months.

Margins %

5/05

8/05

11/05

2/06

5/06

8/06

Gross

14.0

13.8

13.4

12.9

12.6

12.1

Op.

10.0

9.9

9.4

8.8

8.2

7.3

Net

6.6

6.6

6.3

6.0

5.7

5.2
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
My fellow Fool Ryan's words on Winnebago last quarter resounded so strongly with the value investor in me that I'm just going to repeat them for you here again today:

2006 results demonstrate just how well run Winnebago is. First of all, it remained profitable for the year and has no long-term debt, and operating cash flow was 2.5 times reported net income because of strong inventory and receivables management. Factor in a small amount of capex, and we see free cash flow came in at approximately $3.45 per share. That's a price-to-free-cash flow multiple of under 10.

Additionally, management continues to benefit shareholders by repurchasing shares and paying a dividend with a current yield of 1.2%. I don't know about you, but those valuation numbers are pretty compelling, with a small yield to collect until industry conditions recover.

I couldn't agree more with that sentiment, and I'd just add that with the company's share price essentially flat since the last earnings report came out, Winnebago remains just as cheap today as it was back then. With a price-to-free cash flow multiple within a rounding error of 10, and analysts projecting earnings growth of as much as 15% per year over the next five years, this stock deserves a close look from any Fool who agrees that when investing, valuation matters.

Competitors:
We covered the whole industry, basically, in "Trailer Park Treasures" last year. But for those who missed it, Winnebago competes with companies such as Thor (NYSE:THO), Fleetwood (NYSE:FLE), Champion (NYSE:CHB), Monaco (NYSE:MNC), Palm Harbor (NASDAQ:PHHM), and Coachmen (NYSE:COA).

What did we expect out of Winnebago last quarter, and what did we get? Read all about it:

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Fool contributorRich Smithhas no financial interest, short or long, in any company named above. The Fool's disclosure policy is remarkably roomy on the inside.