Camping World (NYSE:CWH) smashed earnings expectations by delivering Q4 non-GAAP EPS of $0.48 and GAAP EPS of $0.34, well beyond what Wall Street was forecasting. The beat was primarily driven by continued top-line growth running red hot at 17.5% to $1.1 billion, and even greater improvement in gross margins and sustained tight cost controls. While JPMorgan finally switched its rating from neutral to overweight, giving credit where it is due, investors still remained unimpressed by the quarter as shares fell by 15%.
Strong Outlook
CEO Marcus Lemonis provided a healthy outlook regarding the supply demand picture for the industry, as supply constraints continue to limit available RV inventory while demand remains persistently strong, even as pandemic lockdowns are subsiding. Fortunately, that only supports the thesis that Mr. Lemonis outlined in early 2020 that he believes demand will remain strong even after the pandemic due to the structural shift in society of people wanting to balance their lifestyle with more outdoor activities, i.e., secular growth. However, analysts continue to believe that the industry is cyclical, and while that is true, I think the path of RV volumes and pricing will reflect a trend that's akin to the well-known long-term economic cycle, i.e., a staircase that reflects higher highs and higher lows over time, or at least that's what it will be for an industry leader like CWH.
While this is nothing new, Camping World has restructured its business to be inherently more profitable, has strategically made private-market bolt-on acquisitions, and continues to push its Good Sam subscription membership, among many other ancillary service offerings, that continues to be enhanced that will continue to drive long-term revenue and earnings growth over the long term, i.e., 5-10 years. Importantly, management is NOT trying to manage analyst or investor expectations quarter to quarter, but it appears to be gearing everything towards longevity and sustainability
