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Bull of the Day: Camping World Holding (CWH)

Camping World Holding (CWH) is a Zacks Rank #1 (Strong Buy) that is a provider of services, protection plans, products and resources for recreational vehicle enthusiasts. 

The stock was hot during the pandemic, as people yearned to get outdoors. One way of doing that was camping, which brought people into Camping Worlds all over the country.  

The stock topped out in early 2021, coming up just shy of $50 a share. Since then, the stock has lost over 50% of its value, falling to a 2020 low below the $21 level.  

But after a solid earnings report, investors are jumping back into the stock. CWH has now moved almost 50% off its June lows, so the question is how much is left in the tank for this stock.

More about Camping World

The company was founded in 1966 and is headquartered in Lincolnshire, Illinois. The company employs over 12,000 people and has a market cap of $1.3 billion. The stock pays a healthy dividend of over 9%.

The company's brands consist of Camping World and Good Sam. It offers new and used RVs for sale, vehicle service and maintenance through retail locations and membership clubs.

The stock has a Zacks Style Score of “B” in Value and Momentum, but “F” in Growth. The growth issue has been a problem for investors, but after the recent big earnings beat, that could be changing.

Q2 Earnings Beat

On August 2nd, Camping World reported earnings, seeing a 15% EPS beat. Q2 came in at $2.16 v the $1.87 expected. Revenue was higher, coming in at $2.17B v the $2.03 expected.  EBITDA margin came in at 12.8% v last year’s 16.2%, while same store revenue was up 0.1% year over year.

Management had the following comments on the call:

“We are pleased with the sale of almost 39,000 new and used RVs which contributed to record revenues for the second quarter. We believe our team has both the focus and experience to navigate our business through changes in market conditions as evidenced by our solid financial results.”

The quarter, with its record revenues, impressed investors who bought the stock higher by over 15%.

Estimates To Rise

Because earnings just came out, the Zacks Consensus estimate has yet to reflect what analysts are doing after EPS. These numbers are something to keep any eye on to see if analysts agree with investors on this bullish sentiment.

There are some analysts already out with commentary. Raymond James commented that robust average selling prices are offsetting volume declines and margin pressures.

Additionally, inventory is stabilizing and because margins were not as bad as feared, the company should benefit substantially when the environment normalizes.  

Truist was also impressed with the beat, saying that the numbers imply a market share gain during the quarter.

Investors should expect more positive commentary from analysts and look for those estimates to trend higher.

The Technical Take

The stock was struggling all year until June, when it finally traded above the 50-day MA. Form there, it chopped around until earnings.

The big pop in shares after earnings took the stock right to the 200-day moving average just under $32. Investors can expect some selling at these levels and then look to buy any pullbacks.

Some levels of interest for investors eyeballing a pullback:

The $28 level is the pre-earnings gap higher.

$25.50 is the is the 21-day Moving average, while $25.00 is the 50-day moving average.

In Summary

It has been a rough ride for those investors that were camped out in Camping World. After a year of pain seeing the stock bleed lower, there is now some hope as the stock showed the company is fighting off the current inflationary atmosphere.

Investors should eyeball pullbacks in the stock and look for opportunities as the stock starts a fresh bullish trend higher.

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