High-Yield Camping World Is A Buy
Insiders have been selling shares of Camping World (NYSE: CWH) but it is nothing for investors to be worried about. The total of selling during the last 12 months is less than 3% of the company’s market cap with insiders and institutions holding more than 75% of the stock. This is not a sign of impending doom. The selling was mostly done by Crestview Partners which holds a seat on the board of directors. The remainder is near evenly split between company offices and offset by insider buying as well. While company insides like the CFO and COO were taking some profits off the table CEO Marcus Lemonis has been buying. According to Insidertrades.com, CEO Marcus Lemonis has purchased more than $300,000 in shares and we’re not surprised. Not only is Camping World doing a robust business but it is paying a healthy 5% dividend yield as well.
Marcus Lemonis, Chairman and CEO of Camping World Holdings, Inc. stated, “Our team’s strong performance for the quarter has allowed us to reach a Company-high Trailing Twelve-Month Adjusted EBITDA of $902 million. As a result, we are raising our 2021 fiscal year guidance from Adjusted EBITDA of $840 million to $860 million to a revised Adjusted EBITDA of $915 million to $930 million.”
Camping World Reports A Robust Quarter
Camping World CEO Marcus Lemonis reported $1.92 in consolidated revenue or a company record for the 3rd quarter. The revenue is up 14% over last year and this a tough comp, sales last year were up 21% and we don’t see growth stopping, only moderating as backlog demand is filled. The revenue also beat the consensus estimate by 490 basis points and is compounded by widening margins as well.
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The company’s gross margin increased by 431 basis points while the operating margin widened by 210 basis points to deliver substantial growth in earnings. The only bad news is that the revenue strength was not seen in the GAAP earnings but there is a mitigating factor. The GAAP EPS of $1.72 is up $0.48 from last year but is only in line with the consensus due to an inventory build. The company built up its inventory of campers by more than 40% or over $400,000 or more than enough to get the market excited. On an adjusted basis, the company’s $1.92 in EPS is up from last year’s $1.58 and beat the consensus by $0.17 or 930 basis points.
It Pays To Own Camping World
Camping World pays a very safe 5.15% dividend yield that is backed up by a very sound balance sheet. The company is paying out only 33% of its adjusted earnings consensus and that consensus is too low. Add to that its low leverage, ample coverage, and free-cash-flow levels and we are expecting the company to make some dividend increases in the coming years. Camping World also buys back its shares and repurchased roughly $25 million during the quarter. The company has over $116 million left in the buyback allotment or about 3.5% of the market cap.
The Technical Outlook: Camping World Confirms Support
Shares of Camping World shot up more than 10% in the wake of the Q3 earnings report but investors should be cautious. While the stock is confirming support at the short-term moving average it is still range-bound. The first target for resistance is at the $43 level and has already been hit. If the price can get above that level a move up to the $48 range is next. If the stock can get above $48 it will set a new all-time high and possibly move up into the $75 range.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Camping World (CWH) | $22.74 | -1.0% | 2.20% | 43.73 | Moderate Buy | $30.64 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
