Did you see what we had to say about RV maker Winnebago
Egads! With titles like that, you just know the news wasn't good last quarter. So I imagine it was with some trepidation that investors listened in as the company announced its fiscal Q4 2006 results last week.
Fortunately, there was no need to fear this time around. Reporting its Q2 results on Thursday, the company revealed one of those against-all-odds situations in which a decline in total profits resulted in higher profits for shareholders. Even as its Q2 net profit "skidded" $200,000 downwards, per-share profits rose by a penny (to $0.24 per share) thanks to Winnebago's continued appetite for its own shares. As the weighted average of shares declined nearly 4% year over year, firmwide profits were concentrated among the fewer shares still outstanding, resulting in higher profits for shareholders who held tight.
By close of trading, two days after this news broke, Winnebago's shares had risen more than 10% in response. But can just a penny's more profit explain such a hike in share price? Probably not, but fortunately again, there was further good news to support the now higher market capitalization.
According to company president Ed Barker, order backlogs are up 40% for Class A gasoline vehicles, and 60% for Class A diesel motor homes, with dealers showing special enthusiasm for ordering Winnebago's Destination and Itasca's Latitude models. Because these models in particular won't begin shipping until next quarter, investors can expect renewed sales strength going forward.
This good news couldn't have come a moment too soon, either, because earlier this month, reports began to break of a looming threat to not just Winnebago, but indeed all rivals in the motor-home and trailer space, from Coachmen
Hence the welcome that Winnebago's optimistic backlog news got on Wall Street. Now, all we have to do is wait a quarter or two and hope it plays out as expected.
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Fool contributor Rich Smith does not own shares of any company named above.