Camping World: S’More Growth Coming to Happy Campers
Forward View is upgrading Camping World to a Buy rating, and we’re moving to a $41 price target (from $33). We’re especially happy to see the company agree with our forecast for a return to positive comps in the used RV business in 4Q. Margins in this key segment are already recovering, too. (See our model updates.) Forward View is also pleased to know that Camping World will be integrating Overton’s, Gander Outdoors and Camping World into unique and synergistic retail centers. The company’s concept is very appealing overall, and frankly, we don’t care whether 40 or 50 Gander Outdoors stores are reopened. Camping World is demonstrating the type of proactive retail discipline that Gander Mountain lacked. In addition, the company’s purchase of TheHouse.com demonstrates a willingness to learn e-commerce. We believe that Camping World is clearly a buy at the current price. Forward View is very optimistic about the company’s future.
Forward View is upgrading Camping World to a Buy rating, and
we’re
moving to a $41 price target (from $33).
One
-
Year Stock Price Chart
Earnings by the Numbers
Camping World
:
S
’
More
Growth Coming to
Happy Campers
Camping World
NYSE: CWH
August 14, 2017
Nathan Yates, M.S.F.
Director of Research
nathan@forwardviewconsulting.com
2
Earnings Summary
•
Camping World
enjoyed a very
strong 2Q.
•
We applaud the
company’s
ability to
increase
revenue over
18% while also
delivering
strong margins.
•
It’s difficult to
find anything to
complain about
in the 2Q
results.
•
We’re bullish
on the stock,
despite the fact
that it’s nearing
the all
-
time
high.
•
Upgra
ding to
Buy. New PT:
$41/share.
The Forward View
Forward View is upgrading Camping World to a Buy rating, and we’re
moving to a $41 price target
(from $33).
We’re especially happy to see the company agree with our forecast for a return to positive comps in
the used RV business in 4Q. Margins in this key segment are already recovering, too. (See our model updates.)
Forwa
rd View is also pleased to know that Camping World will be integrating Overton’s, Gander Outdoors and
Camping World into unique and synergistic retail centers. The company’s concept is very appealing overall,
and frankly, we don’t care whether 40 or 50 Gan
der Outdoors stores are reopened. Camping World is
demonstrating the type of proactive retail discipline that Gander Mountain lacked. In addition, the company’s
purchase of TheHouse.com demonstrates a willingness to l
earn e
-
commerce. We believe that Campin
g World is
clearly a buy at the current price. Forward View is very optimistic about the company’s future.
Model Updates
•
3Q:
Used Vehicle y/y revenue decline reduced by 300 bps, New Vehicle revenue growth increased by
600 bps, New Vehicle gross margin
increased by 70 bps, Used Vehicle gross margin up 800 bps,
Consumer Services and Plans gross margin up 100 bps, Parts, Services and Other gross margin
trimmed by 200 bps, SG&A deleveraged by 300 bps, DD&A reduced by 10 bps, Consumer Services and
Plans oper
ating margin up 200 bps.
•
4Q:
Parts, Services and Other revenue growth increased by 100 bps, Consumer Services and Plans
revenue growth increased by 50 bps, New Vehicle revenue growth increased by 400 bps, Finance and
Insurance revenue growth increased by 4
00 bps, Used Vehicle gross margin up 400 bps, SG&A
deleveraged by 100 bps, Consumer Services and Plans operating margin up 200 bps.
•
FY18:
Revenue growth increased, gross margin increased, SG&A deleveraged, DD&A trimmed,
operating margin
increased.
Earnings Estimates
Valuation
5
Quantitative Forecast
6
Disclaimers & Disclosures
Analyst Certification:
I, Nathan Yates, certify that the views expressed in this publication accurately reflect my personal views about
the subject
companies and their securities. I also certify that I have not, am not, and will not be compensated directly or indirectly in
exchange for expressing any specific recommendation in this report.
Required Disclosures:
I,
Nathan Yates
,
may own long or short positions in securities mentioned in Forward View
Consulting
research, however I will not invest in securities listed in the Forward View Formal Coverage document. I will not trade in an
y
securities that have been mentioned in Forward View Consulting research within the three days following publication of
said research.
I confirm there is no known affiliate ownership in, or employment by, companies formally covered by Forward View Consulting.
I
also confirm that I have, and will seek, no insider knowledge of companies formally covered by Forward View Consu
lting.
Important Disclosures:
Forward View Consulting employs various equity valuation methodologies to develop investment ratings,
target prices and conclusions. Certain risks to our ratings, target prices and ultimate investment conclusions exist which
include,
without limitation, a company’s failure to achieve financial results, product risk, regulatory risk, general market condition
s and
volatility, interest rates, political factors, acts of God, terrorist activities and changing economic conditions. F
orward View Consulting
is not a registered investment advisor and is not acting as a broker
-
dealer under any federal or state securities laws. Notable
compliance policies include (1) prohibition of insider trading or the facilitation thereof, (2) maintaini
ng client confidentiality (3)
appropriate use of electronic communications, amongst other compliance
-
related policies.
Disclaimer:
Material provided in this publication is for educational purposes only, and was prepared from sources and data believed
to b
e reliable, but we do not guarantee its accuracy or completeness. We cannot and do not guarantee the adequacy, accuracy or
completeness of this information or the suitability or profitability of any particular investment. This publication does not
consider
the
specific investment objectives, financial situation, or particular needs of any specific person or business, or any investmen
t laws and
regulations, regulatory capital requirements, or other restriction applicable to investments by certain institution
al investors.
Accordingly, you are responsible for your own investment research and decisions, and should seek the advice of a qualified fi
duciary,
and perform your own due diligence before investing. You should also consult your own legal advisor in deter
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e
regarding future performance. This publication reflects a judgment at its original date of pub
lication by Forward View Consulting and
is subject to change without notice. The price, value, and income from any securities or instruments mentioned in this report
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acts of
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Recommendation
Expected Return
Buy
Shares are expected to
deliver alpha
Hold
Shares are expected to match the market's
risk
-
adjusted
return
Sell
Shares are expected to underperform
the market
Next
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