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Camping World Is A Compounding Machine, The Market Just Does Not See It Yet

Apr. 05, 2021 9:07 PM ETCamping World Holdings, Inc. (CWH)KMX28 Comments
Philaretos profile picture


  • CWH has grown EBITDA per share at a nearly 20% CAGR over the last decade and will grow mid teens over the next 7-8 years.
  • CWH trades at below 6x EV/EBITDA versus Carmax at 14x, which does not make sense.
  • We explain why RV demand is likely to be strong for at least the next few years.
  • CWH is run by a very successful billionaire CEO with "fire in his belly" and nearly his entire net worth in CWH equity (and has been buying more).
  • CWH is building and buying dealerships at ~2x EBITDA and generating very attractive returns on capital, and will continue to do so for a long time.

We have a variant perception on Camping World Holdings, Inc. (NYSE:CWH). We believe the company is misunderstood and severely undervalued.

Most investors look at CWH in at least one of the following ways:

  • Very cyclical business selling high priced and highly discretionary RVs.
  • COVID beneficiary and this is peak earnings, with comp headwinds coming from the COVID “one time” benefit.
  • “Promoter/reality TV/showman” CEO who missed or had to take down his own guidance five times over a ~2-year stretch from 2018-2019.

We view CWH as follows:

CWH has grown per share EBITDA at a nearly 20% CAGR from 2011-2021E, from $108M to 2021E of $670M. CWH CEO Marcus Lemonis cut his teeth in the auto dealership industry, initially starting as a salesman. He saw the opportunity in the growing RV dealership category and worked his way to becoming the CEO of an RV dealership group in 2001. Over the last two decades, Lemonis has grown his group through M&A and organic growth into what is now Camping World. ML RV Group is wholly owned by Lemonis who effectively owns ~40% of Camping World. We believe Lemonis embodies a successful owner operator with “fire in his belly”, he has become a billionaire through growing CWH and has nearly his entire net worth in CWH equity (and has been buying more in the open market).

CWH has ~2.1M loyalty Good Sam club members that feed a lot of highly recurring and high margin revenue. Good Sam is 63-80% gross margin and includes breakdown insurance, roadside assistance, property & casualty insurance, travel protection, and consumer shows. A Good Sam membership allows Camping enthusiasts discounts on campgrounds as well as many other products and services. New vehicles are only 25% of Gross profit (14% GMs and cyclical), with the rest of the makeup being 12% Good Sam, 31% F&I, 22% used, and 19% products and services. CWH skews 85-90% towables which are not as much of a

This article was written by

Philaretos profile picture
Equity Research Analyst

Analyst’s Disclosure: I am/we are long CWH, LAZY.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (28)

Thomas Richmond profile picture
Thank you very much. Very interesting article. Will look into CWH.
OverTheHorizon profile picture
Everybody outdoors!

Anyone adding here? This has gotten beaten to an unbelievably cheap price - we’re at 5 times 2021 EBITDA, FCF now. Adding big!
Joseph investing profile picture
@Gabs7500 Im in at $38.60, pondering to go a bit overboard. Are you on LAZY as well?. It has got beaten quite a bit as well recently.
OverTheHorizon profile picture
Any questions?

cyprus avenue profile picture
@OverTheHorizon coast to coast with the profit
Joseph investing profile picture
Top quality analysis.

Initiated position at $39

Good luck to all!
a fund just sold a 6 million share block. I guess their view is somewhat different
thanks for the article. "Over the last two decades, Lemonis has grown his group through M&A and organic growth into what is now Camping World. ML RV Group is wholly owned by Lemonis who effectively owns ~40% of Camping World." I think this is wrong, ML RV only owns 83,100 shares. His combined holdings are still impressive, but not 40%.
Justin Polce profile picture
Appreciate your work. Sure, there's alot of consolidation, though I don't know how ambitious CWH will be when it comes to acquiring dealers. Moreover, they're not afraid to close dealerships that aren't producing. Might make the growth lumpy over time. In other words, they'll look for good deals v. outright expansion. For what it's worth, service could be a huge (high margin) part of the business in the future...one that makes customers happy too. Imagine a nationwide RV service network. You'll also be able to buy an RV online with the click of a button. Sounds like a stealth tech company. Just my $0.02. Once again, thanks for your research!
@Justin Polce lemonis is about as ambitious as you can get in terms of expansion/acquisitions
bazooooka profile picture
I like LAZY better but both will do very well if this RV cycle is still only mid innings.
mudil profile picture
What a great analysis: thank you for your work. I was just looking around for long ideas, and your article is so well researched and analyzed!
This is a thorough analysis of future growth projection. Any concerns around the 1.5bn in debt maturity coming up in 2023 or is the underlying assumption that this gets refinanced once the company demonstrates ability to grow ebitda over next few quarters?
Josh Klein profile picture
@Philaretos Nice article. Do you think CWH is a better bet than LAZY? I think LAZY is cheaper with more growth runway. I also think they should have $100MM in cash on their balance sheet once they refinance their debt come June time.
Philaretos profile picture
@Josh Klein LAZY is much cheaper and will grow faster.
LAZY did 59M in adj EBITDA in 2020, industry retail growth likely to be MSD in 2021, LAZY can continue to push price as inventory for the industry remains very tight so margins should expand in 1Q-3Q. LAZY will get a ~full year contribution from a handful of new dealerships announced, so that should add 6-7M in incremental EBITDA, plus another 4/5M or so from deals they will likely announce in coming weeks/months.

So 70M + 7M + 5M, LAZY should do $82M in 2021 versus lone analyst Craig Hallum at $53M. Cash of 75M today with 25M in bank debt, they will increase credit line to ~60M (sub 1x EBITDA) thus adding 35M cash. On fully diluted warrants raise $52M, prefs convert, management given 1M shares effectively. Fully diluted share count of 21.4M, YE 2021 cash will be $210M with debt at below 1 turn. This equates to $10/sh in cash and run rate EBITDA of $3.83/share, the market is saying earnings will fall off hard.

Even if you think 2021 is peak and there is a ~20% reset lower in EBITDA (SSS decline HSD and margins compress 1.5%), then run rate reset EBITDA exiting 2021 would be $65.5M or $3.06/sh, but LAZY will use that $10/sh cash over the next ~3 years to buy another $3.30/sh in EBITDA, plus LAZY will generate a couple bucks per share in FCF each year. So say 2022-2024 they generate 2.40/yr in FCF for $7.20 total, they buy $3.30/sh in EBITDA, then add the reset 2021 exiting EBITDA run rate of $3, so 2024 you have $6.30/sh in run rate EBITDA with $7/sh in cash. $6.30 x 7 plus $7 cash is $51.

Coliseum Cap (pref owners) has a lot of skin in the game here, management is highly incentivized as well. Coliseum needs $24/$25 by 1Q23 for their prefs to convert to ~6M shares – if they don’t hit this bogey they leave ~$100M on the table…
@Philaretos CWH may be more expensive but think they will be the gorilla in the industry. Their business model seems broader and potentially less cyclical than LAZY.
AssetFlower profile picture
@cirriusgator Agree that there is a set of larger buyers that can't touch a small cap like LAZY. I like owning both.
Now this is how you conduct due diligence and value investing. Well done - should be required reading for all SA authors.
I stand corrected on the M&A multiple. I had missed that paragraph.

Really enjoyed this article. Nice analysis, especially with looking at the cash flows.

CWH has seen dramatic gains in both operating cash flow and FCF since 2019. It has been a great holding since last April when I bought it and several "recreation' stocks to see if that theme would play out (and boy, did it ever). For CWH specifically, though, looking at them today I still believe management needs to take steps to reduce overall debt levels by 25-30%. Yes, everyone wants to play with debt in this ultra low-interest rate environment or world of ours. But the business CWH is in, as the past has shown, is not kind to those getting stuck holding a lot of debt. Too many things can go wrong. Thus, maybe drop overall debt down by 30% over these next 10 months, create that breather room if things again slow down radically.

Thank you again for the article on CWH.

The best of fortune to us all
FastnBulbous profile picture
Thank you for posting this comprehensive look at CWH. I have been long since April 20 and have added throughout the year. Shockingly little analysis on the company despite the many secular trends in its favor, and its aggressive management strategies.

My largest portfolio holding in the CD sector at a 2.4% overall portfolio weighting, and I continue to be OW.

Thx again for sharing your work.
Very low margin business at or near the top of its cycle. Not a great reason to invest.
@T87 I'm not so sure this business is as cyclical as it has been in the past. I do think RV sales will be cyclical but dig into what ML is trying to do with CWH. Their business model is much more than just selling RV's. My take is the market 'thinks' it's very cyclical at the top of a cycle but the next 4-6 quarters are likely to reveal this isn't the case. Note Vanguard's fund families just increased their stake to over 10%. As of the latest Form 13 filings 13 of the top 15 institutions increased their holdings or held steady. Also, Fidelity owns a chunk and has been adding (my favorite major MF family). Since the Mar 2020 F13 reporting period intuitional investors have gone from 184 to 333 and increased every quarter. Also, famed short seller Marc Cohodes is long...someone who does quite a bit of DD in his positions.

I like the fact that there is decent short interest as a % of the float as I expect the shorts think this is a highly cyclical business at the top of a cycle. My guess would be they are going to be surprised in the quarters to come. That should provide additional fuel to the upside.
OverTheHorizon profile picture
Excellent. Coast to Coast with The Profit.
Derek Capo profile picture
Who is the better operator lazy or cwh? Lazy def looks cheaper than cwh.
AssetFlower profile picture
@Derek Capo LAZY is a small cap, pure play. Same category but a very different thesis IMO. I own both for what it’s worth.
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