Winnebago's Fiscal Q2 Strong, but We Believe Macro Fears Could Keep Stock Down for Some Time

We are not changing our Winnebago fair value estimate after the company’s stock fell over 9% on March 23 following release of fiscal 2022 second-quarter earnings. We consider our modeling assumptions to be conservative over the next five years with low-single-digit revenue growth on average across fiscal 2023-26 and total company backlog remains robust at $4.37 billion, though down slightly from fiscal first quarter’s $4.54 billion. Still, with inflation and supply chain issues likely to remain for the rest of fiscal 2022 and into fiscal 2023, in our view, we think the stock may remain undervalued for a while. We understand some investors may fear these macro headwinds worsening, but the pandemic has created tremendous new demand for recreational vehicles even among Americans younger than the baby boomer generation, and we see Winnebago’s premium brands and healthy balance sheet enabling it to keep posting good results for a while.