Thursday, June 17, 2010

Winnebago Has It Really Changed?

Winnebago (WGO) announced improved numbers and popped its stock price quite nicely. Looks like investors were surprised. But wait lets take a quiet read and think about the numbers. The order backlog has increased but even the company admits orders can be cancelled at any time.

Chairman, CEO and President Bob Olson let investors know this is the first time in two years that they have printed black ink on an operating basis. That’s good Bob. Now tell us about sustainable changes that you have made in your break even points and operating leverage. If sales go into the toilet again how fast can you cut expenses? How fast can you start to conserve cash?

None of these fundamental issues were dealt with by management. They just feel they can excite the dealers with the new models for 2011. Same old thinking will bring the same old problems. Next time will be faster and harder.

Disclosure: No position in any stocks mentioned in this post.