Winnebago’s third-quarter results reported earlier this week show a company that is on a roll. Give credit to lower gas prices, or a growing class of retirees, or maybe just a new trend in vacationing, but sales of RVs are up.RV.image

Now to be clear, Winnebago Industries (NYSE: WGO) is not the only company that makes the recreational vehicles used by large families and empty nesters alike. It does have a name that’s become synonymous with a certain kind of road trip, and judging from Winnebago earnings in the recent quarter, a lot more people are vacationing by RV.

Cost Controls Key to Winnebago Earnings

But Winnebago earnings in the third quarter reflect more than just a growing revenue base. In fact, while certain business segments, such as towables, showed a surge in revenues, the company achieved a strong increase in net income, largely because of careful cost controls.

Winnebago’s total third-quarter revenue increased 2.1% to $272.1 million, while net income rose to more than 25% to $14.4 million or 53 cents per share. That modest revenue gain, however, really doesn’t capture how strong Winnebago’s third quarter was. Shipments in motorized units rose 12.4% while shipments in tables surged 62.4%. Total revenue growth was offset by the company’s exit of its non-core aluminum extrusion business.

A Nod to Good Management

In the Winnebago earnings release, the RV company also said that its third-quarter net income benefited from close attention to labor and materials costs and margins. This is important since it signals a well-managed company that is preparing to weather a more difficult business climate that could result from rising oil prices.

For now, oil prices are low and Winnebago is on a roll. But with a stock price that’s risen about 15% year to date and more than doubled over the past five years, the company has a long track record of a steady performance.

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Published by Wyatt Investment Research at