What is that? A Winnebago with wings?
Before the market open, Winnebago Industries reported that fourth-quarter net income rose to $14.8 million, or 49 cents per share, one revenue of $238 million. Analysts were looking for a profit of 41 cents per share on revenue of $223 million. Looking forward, the company said that While we believe the Federal Reserve's recent decision to reduce interest rates is a positive step toward improving market conditions for motor homes, it may take some time for this to translate into sustained growth of the retail motor home market. In the meantime, we believe dealers will continue to keep their motor home inventories low or further reduce them as they go into the slower fall and winter seasons.
Technically speaking, the shares rallied sharply heading into the report, pulling their 10-day and 20-day moving averages into a bullish cross. These same trendlines had helped to force the shares steadily lower since early April. Meanwhile, it seems that options speculators had expected the better-than-expected earnings, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.51 ranked below 92% of all those taken during the past year.
Still, short sellers could be on the receiving end of a short-squeeze situation today if WGO shares takeoff. Nearly 27% of the stock's float is sold short, and an unwinding of these positions following today's earnings report could give the equity a sharp lift.