The shares of recreational Vehicle manufacturer Winnebago Industries (NYSE:) outperformed the broader S&P 500 index last Friday. The company’s better-than-expected quarterly earnings caused the stock to gain slightly in price. WGO’s low profit margins, rising input costs and limited profits will make it difficult to compete in the fiercely competitive RV market. Read more to find out.Recreational vehicle (RV) manufacturer Winnebago Industries, Inc. (WGO) in Forest City, Iowa, operates in six segments–Grand Design Towables; Winnebago Towables; Winnebago Motorhomes; Newmar motorhomes; Chris-Craft Marine; and Winnebago Specialty Vehicles. Due to the COVID-19 pandemic, RVs saw a significant increase in demand as more people searched for other travel options. WGO CEO Michael Happe said in an interview that the pandemic accelerated WGO’s growth trajectory because the company was able to optimize retail pricing in a way it had not been able to do in a long time.

For its fiscal year 2022 first quarter, ended November 27, 2021, WGO’s revenues increased 45.7% year-over-year to a record $1.20 billion, surpassing the FactSet consensus estimate of $1.03 billion. It can be explained by 37.5% of organic growth driven by high consumer demand and price rises. The gross profit was $229.40million, an increase of 67.4% over the previous year. The net income increased by 73.5% to $99.60million, compared with the previous year. Its adjusted earnings per share were $3.51. This represents an increase of 97.2% over the quarter prior to that. And the company beat the Street’s EPS estimates by 50%.

Following the earnings release on December 17, shares of WGO gained 1.1% intraday to close Friday’s trading session at $68.41. WGO outperformed the broader S&P 500 index, which declined 0.6% intraday on Friday. The stock’s price has risen 14.1% year to date.

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