Winnebago Valuation Analysis

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Winnebago Valuation Analysis
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Qualitative Analysis Part One

• Market Leader
• Winnebago is the top-selling motor home
  manufacturer with 17.5 percent market share.
• Recent Slump in Sales and Profits
• 2006 Sales declined by 12.9 to 864 Million from
  992 Million in 2005
• 2006 Earnings declined by 31.3 to 44.7 Million
  from 65.1 Million
• 2006 EPS declined by 28.6 to 1.37 from 1.92
• This is the second consecutive year of annual
  declines in sales and earnings.

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Qualitative Analysis Part Two

• Demographics
• Number of people over the age of 55 is set to
  increase by 4 million annually through 2030.
• The 55-64 age group is set to grow by 45 over
  the next ten years vs 8 for the overall
  population.
• Stock Buyback/Dividend Growth
• Winnebago has established a regular pattern of
  stock buybacks. They currently have 22.2
  million in remaining buybacks under the current
  repurchase plan following 57.8 million in
  buybacks during fiscal 2006.
• Dividends per share have increased from 0.10 to
  0.40 over the past few years.

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Qualitative Analysis Part Three

• Sales of RVs have been hit hard by (primarily) a
  significant increase in fuel costs and
  (secondarily) a slight increase in interest rates
  over the past two years
• One of worst industries for Timeliness (89 of 97)
  according to Value Line
• 2009-2011 Price Projections are not overly
  encouraging

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Qualitative Factors Part Four

• Winnebago is sensitive to fuel costs, interest
  rates, economic factors, and strong financial
  markets.
• Fuel costs
• Fuel costs have declined significantly from their
  peak in mid-late summer.
• Consumers may be adjusting to 2.00 - 2.30 per
  gallon level
• Still a lot of uncertainty in this area
• Interest rates
• Interest rates have risen over the last couple
  years, however there are signs that this is (at
  least temporarily) stabilizing.
• Economy
• The economy appears to be on stable footing.
  However there is concern over the impact of
  housing and consumer debt.
• Financial Markets
• Strong financial markets increase retirement
  funds and make the purchase of a 100,000 -
  200,000 RV more feasible. After a few years of
  weak financial markets, we are starting to see
  the markets reach new highs which may be a
  positive factor for Winnebago

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Valuation Models

• See Spreadsheets
• Discounted Cash Flow Analysis
• Price Earnings Analysis