RV Manufacturer Winnebago (NYSE: WGO) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 7.8% year on year to $777.3 million. On the other hand, the company’s full-year revenue guidance of $2.85 billion at the midpoint came in 0.5% below analysts’ estimates. Its non-GAAP profit of $0.71 per share was 33.5% above analysts’ consensus estimates.

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“I am proud of our team’s efforts in delivering solid overall results in the fourth quarter, especially given the challenging operating environment,” said Michael Happe, President and Chief Executive Officer of Winnebago Industries.

Company Overview

Created to provide high-quality, affordable RVs to the post-war American family, Winnebago (NYSE: WGO) is a manufacturer of recreational vehicles, providing a range of motorhomes, travel trailers, and fifth-wheel products for outdoor and adventure lifestyles.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Winnebago grew its sales at a sluggish 3.5% compounded annual growth rate. This was below our standard for the industrials sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Winnebago’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 10.5% annually.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Motorhomes and Towables, which are 46.5% and 39.4% of revenue. Over the last two years, Winnebago’s Motorhomes revenue (homes on wheels) averaged 12.7% year-on-year declines while its Towables revenue (non-motorized vehicles) averaged 7.2% declines.

This quarter, Winnebago reported year-on-year revenue growth of 7.8%, and its $777.3 million of revenue exceeded Wall Street’s estimates by 6.3%.

Looking ahead, sell-side analysts expect revenue to grow 3.6% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below the sector average.

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Operating Margin

Winnebago has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.1%, higher than the broader industrials sector.

Looking at the trend in its profitability, Winnebago’s operating margin decreased by 9.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Winnebago generated an operating margin profit margin of 2.6%, up 5.1 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Winnebago, its EPS declined by 8.3% annually over the last five years while its revenue grew by 3.5%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of Winnebago’s earnings can give us a better understanding of its performance. As we mentioned earlier, Winnebago’s operating margin expanded this quarter but declined by 9.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Winnebago, its two-year annual EPS declines of 53.2% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Winnebago reported adjusted EPS of $0.71, up from $0.28 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Winnebago’s full-year EPS of $1.68 to grow 39.5%.

Key Takeaways from Winnebago’s Q3 Results

It was good to see Winnebago beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. And while its and its full-year revenue guidance fell slightly short of Wall Street’s estimates, full-year EPS guidance beat. Zooming out, we think this quarter was quite good. The stock traded up 12.7% to $35.60 immediately after reporting.

Sure, Winnebago had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.