Most people are surprised to learn RV culture is thriving in the United States. In general, people tend to think of RVs as relics of the past, but Camping World’s success is a testament to the opposite.
The company’s second quarter earnings topped the street’s expectations by a significant margin. The question is whether Camping World can maintain the momentum.
About Camping World
Camping World is the nation’s largest RV retailer. The company has 130 stores spread across 36 states, and entered the retail space earlier this year with the acquisition of Gander Mountain sporting goods’ assets.
Re-branded as Gander Outdoor, these products complement Camping World’s RV culture quite nicely. The company also acquired RV dealerships in Texas and Michigan earlier this month. Some were surprised when the company bought TheHouse.com, a group that specializes in the sale of bikes, general outdoor gear, snowboards, wakeboards and skateboards.
Camping World also owns Good Sam Club. This group has 1.7 million members who are responsible for considerable recurring revenue at high margins. Camping World is making no secret of the fact that it intends to sell more than RVs as time progresses. Yet RVs will always be the company’s bread and butter.
Look for Camping World to continue its dominance in the RV niche by acquiring smaller operators in the space and re-branding them to expand its nationwide footprint as time progresses.
Camping World’s Most Recent Quarterly Earnings
Camping World’s revenue was a whopping $1.3 billion for the second quarter. This equates to adjusted diluted earnings of 91 cents per share. The street expected earnings around the $1.17 billion mark along with earnings per share of 68 cents.
Sales jumped by 20 percent on a year over year basis. The company’s net income increased by 40 percent. The all-important same-store sales metric showed double digit growth at 10.6 percent. It is clear that there is ample demand for RVs.
Is There Any Bad News?
It is worth noting the average sale price for new vehicles sold by Camping World decreased by 4.5 percent. However, once you consider the company’s new vehicle sales increased by nearly 40 percent, the sales price drop doesn’t seem very important.
The bottom line is demand for RVs is high, and there is a shortage of used vehicles for sale. Add in the fact that Camping World’s price drop was spurred by increased sales of towable non-motorized units, and it is even less concerning.
The bump in sales of such non-motorized units is a sign that younger individuals are flocking to Camping World. These youngsters are highly coveted, as they also represent future buyers who have the potential to remain loyal across posterity.
The fact that millennials have fallen in love with RVs is excellent news for Camping World. These massive vehicles can be moved about from one place to another, providing a surprisingly comfortable living space that allows owners to enjoy all sorts of different experiences across wide-ranging destinations.
Part of the appeal of RVs is the fact that they can be used as tiny homes of sorts. These vehicles are no longer viewed as a means of traveling to various destinations upon retirement. Rather, younger people are flocking to them as mobile living spaces that give them the chance to see the country for little money. This is precisely why the sales of RVs are approaching record levels.
RV dealers like Camping World will sell upwards of 445,000 units in 2017 alone. This figure is double that of the number sold a decade ago. Today’s RV sales are the highest they have been in four decades, and for good reason. These vehicles really are low-cost tiny homes on wheels. Millennials are particular adventurous and experience-oriented. Add in the fact that they witnessed the economic and housing meltdown of 2008, and their affinity for affordable tiny homes on wheels is all the stronger.
Will The Momentum Continue?
Camping World’s stock is up about 60 percent since going public a year ago. Priced at $36.84, the stock is approaching its 52-week high. The question is whether there is more room to grow. It appears there is.
Consider the fact that RV-loving millennials are entering the workforce in droves. Their earning power is skyrocketing as their baby boomer parents retire and high-paying positions open. In fact, millennials as a whole will likely be worth an astonishing $24 trillion by 2020.
If you believe this age cohort will remain interested in RVs for years or decades, you should own stock in Camping World.
Regards,
Ethan Warrick
Editor
Wealth Authority
