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Bear of the Day: Camping World Holdings (CWH)

Zacks

Camping World Holdings, Inc. (CWH) is the go-to company for RV enthusiasts, providing services, protection plans, products, and resources for customers; its brands include Camping World and Good Sam. The company offers new and used RVs for sale, vehicle service, and maintenance through its retail locations and membership clubs.

Q2 Earnings Disappoint, Shares Plunge

Last month, Camping World reported second-quarter results that came in well below analyst expectations, and shares fell over 13% on the report. Earnings of 45 cents missed the Zacks Consensus of 64 cents. Revenue of $1.47 billion, though, managed to just beat our consensus of $1.45 billion and grow 2.3% year-over-year.

The company’s biggest issue that it currently faces is weakness in the overall RV market. During Q2, sales of new vehicles fell 6.3% to 22,900, while average selling prices were about flat.


Despite hope after its Q1 report that there could be signs of a turnaround on the horizon, investors, once they saw the Q2 numbers, began to realize that maybe that wouldn’t be the case for Camping World.

In a post-earnings call with invetsors, CEO Marcus A. Lemonis said that "As a management team, we've spent considerable time looking at multiple scenarios and have concluded that for purposes for full year 2019 guidance, we must assume that the current market conditions and uncertainties will continue.”

Falling Estimates

Analysts have turned bearish on Camping World, with six cutting estimates in the last 60 days for the current fiscal year. The Zacks Consensus Estimate has dropped drastically, down 68 cents during that same time period from $1.17 to $0.42 per share; earnings could now see a roughly 70% year-over-year decline for fiscal 2019.

This sentiment has stretched into 2020, and our consensus estimate has dropped 60 cents in the past two months as well.

CWH is now a Zacks Rank #5 (Strong Sell).

Bottom Line

Shares of CWH are down almost 39% since January, and have fallen around 63% in the past one-year period.

It’s going to take a lot of patience for current shareholders to continue holding on to Camping World. But right now, it looks better stay away, since consumers seem to be steering away from RVs and the company itself is not too confident in a quick turnaround plan.

If you’re an investor interested in adding a recreational and leisure stock to your portfolio, SeaWorld Entertainment (SEAS). SEAS is a #1 (Strong Buy) on the Zacks Rank, expects earnings to grow over 200% for fiscal 2019.

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