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by David Gibbs

Winnebago Industries, Inc. (NYSE:WGO) is a manufacturer of motor homes, or self-contained recreation vehicles used primarily in leisure travel and outdoor recreation activities. The company sells motor homes through independent dealers under the Winnebago, Itasca and ERA brand names. WGO sports a $443 million market cap and has beaten estimates in six of the past twelve quarters.

Earnings: 1Q profit of $3.8 million ($0.13/share) vs. a 1Q09 loss of $1.3 million ($0.05/share). The most recent Q included gains related to a $644,000 asset sale.

Revenue: Up 53% YoY to $123.7 million.

Actual vs. Wall St. Expectations: WGO beat the street, as analysts were expecting EPS of $0.02/share.

Notable Stats: Deliveries of motor homes popped 40% YoY while Winnebago dealer inventory rose 32%.

The company’s balance sheet remains very strong with no debt and about $3 per share in cash.

Operating margins were 3.5%, excluding the above-mentioned $644,000 asset sale gain.

Gross margins rose from 0.6% all the way to 9.1%.

Did You Hear That? CEO Bob Olson said on the call that “the outlook for 2011 looks good and labor availability is the one possible constraint the company could have later in fiscal 2011.”

Analysts at Morningstar noted that they “think Winnebago can be successful if it does not leverage up the company over time to make deals and only pursues acquisitions with a high probability of sufficient return. We will reduce our fair value if management starts to constantly make acquisitions simply to bring in more revenue without sufficient regard to long-term profitability.”

Competitors to Watch: Thor Industries (NYSE:THO), Monaco Coach Corp. [MCOAQ.PK], Skyline Corporation (NYSE:SKY), Cavco Industries (NASDAQ:CVCO).

Technicals: After last weeks rise, shares of WGO are not far from completing a cup-shaped base dating back to this past May. The stock’s 50-day moving average is poised to break above its 200-day line in the coming days, and volume has been steadily increasing for the past four weeks. All are bullish signals, and a breakout above $17.43 may be the beginning of the company’s next move higher. However, understand that cup-shaped bases often have handles, meaning that initial breakouts often fail, with the following “handle” breakout being the move that augurs in favor of future gains.

Commentary: WGO swung to a fiscal first-quarter profit that handily topped analysts estimates. Higher deliveries and a rise in average selling prices were behind the gain. The RV maker has returned to profitability in recent quarters, recovering from an industry crisis that saw some competitors file for bankruptcy. Still, it faces consumers who are reluctant to make big purchases due to persistent high unemployment and housing woes. The company is an interesting play for those seeking exposure to large-scale consumer purchases.

Disclosure: No holdings in WGO.

Source: Winnebago Pops as Americans Hit the Road