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Can Winnebago (WGO) Run Higher on Rising Earnings Estimates?

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Investors might want to bet on Winnebago Industries (WGO), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

Analysts' growing optimism on the earnings prospects of this recreational vehicle maker is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Winnebago, as there has been strong agreement among the covering analysts in raising estimates.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $1.72 per share for the current quarter, which represents a year-over-year change of +761.54%.

The Zacks Consensus Estimate for Winnebago has increased 35.01% over the last 30 days, as six estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $7.24 per share, representing a year-over-year change of +180.62%.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, six estimates have moved up for Winnebago versus no negative revisions. This has pushed the consensus estimate 21.89% higher.

Favorable Zacks Rank

The promising estimate revisions have helped Winnebago earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Investors have been betting on Winnebago because of its solid estimate revisions, as evident from the stock's 6.3% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.


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Winnebago Industries, Inc. (WGO) : Free Stock Analysis Report

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