CHICAGO – Winnebago Industries Inc. (WGO) quarterly earnings nearly doubled on brisk sales of its recreational vehicles as consumers shrugged off high fuel prices, the company said Thursday, sending its shares up more than 13 percent.
Shares of other RV makers such as Fleetwood Enterprises Inc. (FLE), Thor Industries Inc. (THO) and Monaco Coach Corp. (MNC) also climbed.
Industry shipments of RVs have accelerated since the beginning of the year as the economic recovery has gained momentum, but investors' worries about whether high fuel costs and rising interest rates would dampen demand weighed on RV stocks in recent months.
Winnebago and other motor home makers are benefiting from demographic trends that find aging baby boomers increasingly attracted to RV travel, and families with children joining the industry's traditional market of active retirees.
Forest City, Iowa-based Winnebago said net income in the fiscal third quarter ended May 29 climbed to $17.7 million, or 51 cents a share, from $9.3 million, or 25 cents a share, a year ago.
Four analysts on average had expected a profit of 46 cents a share, with estimates ranging from 42 cents to 48 cents, according to Reuters Estimates.
Analysts said increased operational efficiencies during the quarter were a key driver of Winnebago's better-than-expected results.
Winnebago also picked up market share from rivals due to the popularity of its new diesel-powered models.
"We've had just excellent internal growth from Winnebago," said Craig Kennison, analyst with Robert W. Baird & Co., who rates the stock "outperform" and whose company may seek investment banking business from Winnebago.
Winnebago improved its profit margins after manufacturing costs rose last quarter due to higher staffing levels and overtime pay as the company ramped up production to meet rising demand.
"The company has really focused on improving gross margins," said BB&T Capital Markets analyst Kathryn Thompson, who rates Winnebago shares a "buy" and whose company may seek investment banking business with Winnebago.
Winnebago said third-quarter revenue increased to $310.2 million from $200.2 million. Its sales order backlog was up 72 percent from a year ago, to 2,444 units, at the end of the latest quarter.
The RV maker said diesel-powered motor homes sold briskly during the latest quarter. The company has introduced several new moderately priced diesel models.
Diesel-fueled motor homes are gaining in popularity because of the added power that allows the vehicles to carry more weight. Diesel fuel also costs less per gallon in the United States than gasoline.
Winnebago Chairman and Chief Executive Bruce Hertzke said he is optimistic about the industry's growth prospects due to the improved economy, stabilizing fuel prices, higher consumer confidence and expectations for interest rates to rise slowly.
"We believe the baby boomers will still want to get out there and continue to travel," Hertzke told analysts and investors on a conference call.
Winnebago's stock rose $4.36, or 13.6 percent, to $36.36 on the New York Stock Exchange (search), off an earlier high at $36.69.
Shares of Thor gained 9.1 percent, Fleetwood climbed 8.7 percent, and Monaco Coach rose 3.4 percent.
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