Shares of recreational vehicle manufacturer Winnebago Industries (NYSE:WGO) are trading down a bit after the company released disappointing first-quarter earnings this morning. The entire industry has been in the doldrums for a couple of years now; when will conditions improve?
Although gas prices and interest rates have moderated, Winnebago is still reeling from shaky consumer sentiment. And while stock market strength is adding to consumer wealth, home price appreciation has ground to a screeching halt in most metropolitan areas. The overall effect is decreased demand for homes -- and the ones with wheels appear to be taking most of the heat right now.
Our recent Fool by Numbers will walk you through the specifics for Winnebago's first quarter, but again the company expects conditions to remain grim as it enters the seasonally slow winter months. The stock is down almost 5% today, but still up almost 10% year to date. Only rival Thor Industries (NYSE:THO) is up more, while Coachmen (NYSE:COA), Monaco Coach (NYSE:MNC), and Fleetwood Enterprises (NYSE:FLE) are all in negative territory so far this year.
Thor has performed the best over the past five years as it has found a way to keep growth chugging along, but I'm more impressed by Winnebago's cash-generating capabilities. Both avoid indebtedness, which partially explains why they have been able to hold up better than their peers during weak industry conditions.
I still like the demographic trends for RV makers. The first wave of baby boomers just turned 60 this year, meaning that the group is just hitting its stride in terms of retiring and pursuing leisure activities, including hitting the open road to sightsee and visit the kids. Time will tell if this will prove a boon to the industry, but what I do know is that the best time to consider a company is when short-term woes hit the stock price, opening the doorway to lucrative long-term returns once conditions end up improving.
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
