Winnebago Industries is a leading U.S. manufacturer of recreation vehicles, which are used primarily in leisure travel and outdoor recreation activities. The company was founded in 1958 and is based in Forest City, Iowa.
WGO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for WGO, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Winnebago Industries Inc ranked in the 77th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 366% on a DCF basis. The most interesting components of our discounted cash flow analysis for Winnebago Industries Inc ended up being:
Its compound free cash flow growth rate, as measured over the past 5.75 years, is 0.42% -- higher than 80.02% of stocks in our DCF forecasting set.
Winnebago Industries Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 6.23. This coverage rate is greater than that of 64.76% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Relative to other stocks in its sector (Consumer Cyclical), Winnebago Industries Inc has a reliance on debt greater than only 19.42% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
UONE, RSTRF, BERY, IPG, and HOFT can be thought of as valuation peers to WGO, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.
In this daily bar chart of WGO, below, we can see the price movement of the last 12 months. The slopes of the 50-day moving average line and the 200-day moving average line turned negative and earlier this month we can see a bearish death cross of these two lagging indicators. Trading volume has not been particularly heavy and the On-Balance-Volume (OBV) line has been pretty steady this year.
Winnebago Industries, Inc. (WGO) today provided an update on additional actions the Company is taking in response to the COVID-19 pandemic, including with regard to its manufacturing operations, and ongoing cost containment and financial management initiatives. Each business within Winnebago Industries currently continues to perform essential activities for its dealers and end customers, including remote retail support for dealers, along with technical care, warranty administration, and parts fulfillment. In addition, the Company intends to resume production at certain of its locations, beginning the week of April 13th.
Moody's Investors Service ("Moody's") downgraded its ratings for Winnebago Industries, Inc. ("Winnebago"), including the company's corporate family rating (CFR, to B2 from B1) and the probability of default rating (to B2-PD from B1-PD), and the rating on the senior secured term loan facility (to B2 from B1). The ratings outlook is negative.