After hitting a pothole in Q2, RV maker Winnebago (NYSE:WGO) returned to its winning ways last quarter, beating analyst estimates as it has so many times in the past. Was this the start of a new winning streak for this Motley Fool Hidden Gems Watch List stock? We find out on Thursday, as Winnebago parks a load of fiscal Q4 and full-year 2006 earnings news on Wall Street.

What analysts say:

  • General consensus. As usual, the six analysts following Winnebago split their votes evenly between buy and hold.
  • Revenues. On average, they predict flat-to-slightly down sales of $230.9 million.
  • Earnings. And a 13% drop in profits to $0.40 per share.

What management says:
Describing his company's performance last quarter, CEO Bruce Hertzke outlined a pair of industry trends that Fools would be well-advised to monitor:

  1. A "continued shift in product mix weighted more heavily toward lower priced motor homes."
  2. "[L]ower motor home deliveries as a result of decreased industry demand."

Generally speaking, motor-home buyers have been less interested in paying up for pricier "Class A products," and less interested in buying motor homes, period. They're mostly confining their purchases to the lower-priced "Class C" segment.

Catering to changing consumer tastes, Winnebago has been pushing lower-priced, fuel-efficient, and especially diesel-fueled Class C products. But while bowing to the demands of shoppers' limited budgets in this respect, the firm remains committed to maintaining its margins as much as possible, and it's resisted the industry trend toward offering price concessions.

What management does:
The results of these strategies are reflected below. Gross margins have slipped somewhat as the firm sells lower-margin Class C products, but they haven't fallen as much as you might expect, had Winnebago offered large concessions on sales price. Operating and net margins are falling in tandem with the gross.

Margins %




























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:
The key to determining the success of Winnebago's strategies will be its market-share trends. If market share declines, it could suggest that consumers are willing to forgo the Winnebago brand name to buy from manufacturers more willing to bend on pricing. Such a trend could also foreshadow Winnebago rethinking its policy, deciding to sacrifice margin in pursuit of share. (That would be bad.)

Fortunately, at last report, Winnebago continued to lead its industry, with a 19.1% share in the markets for both Class A and Class C. That was up from 17.4% in the first four months of 2005. So far, it seems, Winnebago is doing an admirable job of navigating the weak motor-home market. The bad news? That market share slipped 20 basis points sequentially -- which could be either an anomaly or a sign that consumers are starting to forsake Winnebago. In Thursday's news, mind this trend closely.

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 contributor Rich Smith has no interest, short or long, in any company named above. The Motley Fool has a full disclosure policy.