Winnebago Industries (WGO) short, mcap=$1.9bn, price $59.13 vs $58.64

$WGO short pitch:
– The RV industry is in the eye of the storm – driven by higher gasoline prices, higher rates, and a weakening consumer.
– Management’s upbeat commentary is misguided.
– Massive demand pull-forward during Covid.
– Demand is down significantly vs 2021 and WGO’s dealers went into selling season with the heaviest inventory levels in years.
– Consensus numbers are way too high and about to be brought down to earth.
– Used inventory is flooding the market and could create a prolonged overhang.
– WGO has a high fixed cost base – during GFC gross margins went from +11% to -15%.

$WGO short valuation:
– In a normalized environment should do $190m in EBITDA.
– At 7.5x mid-cycle multiple, that’s a $34 stock.
– Realistic target could be lower – when shit hits the fan, these things tend to overshoot to the downside.

Exp. gain: 41% to $34/share (on short)

Full WGO short write-up (free guest account required):

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