A staple of the recreational vehicle industry, Winnebago (WGO) reported third-quarter results this morning with strong results as the company beat on both the top and bottom lines. EPS came in at $1.45 versus estimates of $0.93. Not only was this the highest reported quarterly EPS for the company in our Earnings Explorer database, but it was also the biggest beat relative to expectations on record. Additionally, the company reported record sales in the quarter at $737.8 million; handily above estimates of $722.9 million and up 39% YoY. Despite the strong results, like most other stocks so far this earnings season, today’s report has been met with selling as the stock is down over 9% as of this writing. As shown in the snapshot of our Earnings Explorer below, all of this is somewhat in line with what could be expected for WGO’s third-quarter results. Even as the stock has boasted the highest beat rate of any quarter in Q3, its stock has only risen in response to its report half of the time. Even though Q3 is typically weak, today’s decline is on pace to be the worst reaction to earnings for WGO since December 2015 and the tenth worst on record.
Back in the spring, interest (proxied by Google Trends data) in outdoor activities like camping, water activites, and recreational vehicles (RV) rocketed higher as people looked to get out of the house and do things that are COVID-safe. WGO was one of the major beneficiaries of these trends. As a result, WGO’s stock price had moved in tandem with search interest in RV’s, rapidly rising in the spring but fading through the summer. With the seasons’ change, search interest for things like boats and pools has waned. RV searches, however, have actually been on the rise again over the past few weeks with WGO’s price joining in. The two have continued to generally track one another well, although the decline in reaction to earnings today is turning this dynamic around.
As we discussed in last week’s Bespoke Report, weaker interest in things like boats and pools are a no-brainer for the time of year and should eventually reach a seasonal trough. Turning back to RV interest in particular, over the past five years, search interest similarly has tended to fall from October through the end of the year (gray shaded regions in the chart below), with some sharp upticks at the very end of the year. This year is a bit different with a sizable uptick occurring early on in the final three months of the year. In the chart below we show Google Trend data for searches for RV’s as well as some other related terms like “Road Trip”, “National Park”, “Hiking”, and “Campsites”. These indices represent interest relative to the highest point of the respective term over the past five years. In other words, a reading of 100 is the peak whereas a reading of 50 is when interest was half of the peak.
So where are people taking these RV’s? Most likely the great outdoors, of course. National parks could certainly be one more specific possibility as search interest is similarly seeing an unusually large uptick given seasonality. To a lesser degree search interest for campsites and road trips are also experiencing unusual ticks higher for this time of year. The most impressive seasonally unusual upswing has been for hiking, which is right around some of the strongest levels of the past five years this week. In other words, COVID seems to be bringing a new fervor to leaf-peeping this fall. Just like we saw in the spring, that strength (this time around contrary to seasonal norms) would be positive for the businesses of names like WGO regardless of the sharp selling in response to earnings today.
Google Trends also provides a geographic breakdown by state of search trends which gives an even more in-depth look at this data. In the heat maps below, we show current search interest broken down on a state by state level. Search interest for these same terms are strongest in some areas of the country that are perhaps the least surprising: the Northwest (i.e. Montana and Wyoming) and Northern New England (Maine, Vermont, and New Hampshire). These are areas of the country that places like national parks or nature-oriented destinations are more prevalent especially in Autumn.