Camping World Holdings, Inc.

CWH Details

Camping World Holdings, Inc. (NYSE: CWH) is the largest retailer of recreational vehicles (RVs) and related products and services in the US. The company operates via a network of RV dealerships, service centres and customer support centres, and an extensive online presence in the US and Canada. As of July 12, 2021, CWH has an established presence in 40 states with over 180 locations through its Camping World and Good Sam brands and its sister company Gander RV & Outdoors.

Strategic Partnerships for Product and Market Expansion: On July 12, 2021, the company, along with Overton’s, a watersports and marine accessories dealer, launched their Nautica branded products for marine, water and outdoor markets. The brand caters to water and outdoor enthusiasts and will feature a range of marine furniture and water recreation equipment.  

On July 07, 2021, CWH announced a strategic investment in Happier Camper, Inc., which develops a modular van conversion system - Adaptiv for vans. Adaptiv features modular cubes (sinks, toilets, bunk beds, refrigerators, cooking surfaces, etc.), enabling customization of vans and campers to fit the customers' needs. Under this partnership, the companies will market Adaptiv and related products for van conversions across the Camping World SuperCenters in the US.

Expanding the Geographical Footprint: On July 06, 2021, CWH announced acquiring a property for an RV dealership in St. Albans City, Vermont. The dealership will open in mid/late 2022. It also signed certain purchase agreements on June 22, 2021, to develop two new RV SuperCenters in Ohio. These new locations are expected to open for business in the fall of 2022.

Robust Q1FY21 Results: During Q1FY21 (ended March 31, 2021), the company registered 51.64% YoY growth in total revenue to USD 1.56 billion vs USD 1.03 billion in Q1FY20, with revenue from the sale of new RVs amounting to USD 821.98 million. Net income for Q1FY21 was USD 147.43 million vs net loss of USD 14.13 million reported in Q1FY20. In addition, CWH sold 31,752 new and used vehicles during the quarter, representing a 38.72% increase YoY.

Key Risks: CWH depends heavily on a few big manufacturers for the supply of its RV inventory.  In FY20, ~69.3% and 27.9% of its inventory was supplied by Thor Industries, Inc. and Forest River, Inc, respectively. Hence, a downfall in efficiency, quantity or lack of technological advancement by these suppliers could affect its financial condition. Further, CWH relies on five distribution centres for its retail, e-commerce and catalogue segments. Therefore, any severe disruption at even one such facility could impact the company’s business.

Outlook: For FY21, the company expects its Adjusted EBITDA to be in the range of USD 770 million to USD 810 million.

Valuation Methodology: EV/EBITDA Value Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CWH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CWH stock rose 16.14% in the past six months and is currently at the mid-point of the 52-week range of USD 21.88 to USD 49.20. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 40.46. We have valued the stock using the EV/EBITDA Value-based relative valuation methodology and arrived at a target price of USD 40.88. Considering the uptick in the stock price, various growth initiatives, and current valuation, we recommend a “Watch" rating on the stock at USD 37.36, down 1.76% as of July 15, 2021, 2:27 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.