During the pandemic, RV sales surged as Americans sought outdoor activities for social distancing. However, RV sales dropped nearly 50% post-COVID-19 and have stayed depressed since. One influencing factor that has been putting downward pressure on sales is high interest rates, as the majority of these products are typically acquired through financing. Leading RV retailer Camping World Holdings (NYSE:CWH) has felt the impact with a significant drop in earnings from 2021 highs, which has caused the stock to fall over 40% in the past three years. Although the company remains optimistic, investors might want to hold off until more positive results are observed.
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Camping World’s Growing Footprint
Camping World Holdings is the world’s leading retailer of RVs and associated services, operating under the heritage of the renowned brands Camping World and Good Sam. It currently boasts 215 store locations, though it aims to continue growing its market share by expanding its footprint to 320 locations by 2028.
The company is also in the process of pruning less performing or non-core assets. In the past quarter, it sold an RV dealership location and inked a deal to sell its furniture manufacturing business. This strategic move is expected to free up capital and lead to a strategic partnership that could bring substantial sales and margin improvement in the company’s parts and aftermarket business.
Review of Camping World’s Recent Financial Results
The company recently reported financial results for Q1. Revenues slightly missed the consensus target of $1.43 billion, coming in at $1.4 billion, a decrease of 6.0% year over year. The first quarter of 2024 saw a net loss of $50.8 million, a stark contrast to the net income of $4.9 million in the same period of 2023, representing a $55.7 million decline. Furthermore, non-GAAP EPS was reported at -$0.40, falling short of expectations by $0.03.
Despite the losses, the Board of Directors declared a regular cash dividend of $0.125 per share on the Company’s Class A Common Stock. This payment will be made on June 27, 2024, to stockholders of record on June 13, 2024.
Is CWH Stock a Buy?
Analysts following the company have been constructive on the stock. For example, KeyBanc analyst Noah Zatzkin recently reiterated an Overweight rating on the shares while lowering the price target from $30 to $26. He noted the company is well-positioned to capture the upside of an RV market rebound.
Overall, Camping World Holdings is rated a Strong Buy based on the recommendations and price targets assigned by seven Wall Street analysts over the past three months. The average price target for CWH stock is $29.83, which represents a 42.45% upside from current levels.
The stock has decreased by over 18% in the last 90 days. It currently sits on the lower end of its 52-week price range of $16.02-$32.37 and continues to demonstrate negative price momentum, trading below the 20-day (21.81) and 50-day (23.12) moving averages.
Final Thought on CWH: Positioned Well for RV Market Rebound
Camping World has navigated a rough post-pandemic market for RV sales. However, management continues to look for ways to grow market share, positioning the company to capture significant upside when the RV market finally turns around. The company’s long-term prospects are promising, but investors might want to wait until the stock’s negative momentum turns positive before establishing a position.
