Investor Essentials Daily

Rising consumer debt could threaten this RV manufacturer’s future prospects

July 3, 2025

The recreational vehicle (“RV”) market has seen steady growth for the past few years due to rising demand for recreational activities and expansion of the tourism sector.

Winnebago Industries (WGO), a recognizable name in the RV space, has seen an uptick in share price following confirmation that its Q3 fiscal 2025 results are in line with analyst expectations.

However, the company could become a casualty of weakened consumer spending.

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Recreational activities and the tourism sector have experienced rising demand for the past several years as countries around the world gradually opened up their borders in the wake of the COVID-19 pandemic.

The global RV market size was valued at $56 billion in 2024, and is projected to grow at a CAGR of 4% from 2024 to 2034.

In the U.S. particularly, consumers turned to RVs because these vehicles enabled them to travel to destinations more comfortably. 

Motorhomes and towable RVs typically come with amenities that enable travelers to sleep, shower, and cook their own meals during long-distance travels.

Due to the increasing popularity of intra-state travel, demand for these vehicles rose, leading to an expansion in the RV space, which companies like Winnebago Industries (WGO) benefitted from.

Winnebago Industries is a manufacturer of outdoor recreation products like RVs, motorboats, various light-to-medium utility vehicles, and lithium-ion batteries used in the marine and RV industries.

Since its founding in 1958, Winnebago has transformed itself into a diversified company that includes brands that manufacture and sell towable RVs (Grand Design), luxury motor coaches (Newmar), and motorboats (Barletta, Chris-Craft).

For the past few years, it has seen a steady rise in market share as demand for RVs and boats saw an uptick due to rising demand for recreational activities and expansion of the tourism sector.

Recently, the company saw a modest jump in share price following the confirmation of its Q3 fiscal 2025 results with earlier preliminary figures that initially triggered a sharp selloff earlier in June.

Towable RV and motorhome sales were down approximately 4% and 2.6%, respectively. Total revenue was down 1.4% year-over-year to $775.1 million, in-line with expectations.

Winnebago also cut its revenue guidance between $2.7 billion to $2.8 billion, a drop from prior estimates of $2.9 billion to $3 billion.

This cut in guidance reflects a shift from higher margin motorhomes to lower price-point and lower margin towable RV models, amplified by challenging macroeconomic conditions and an uncertain interest rate environment.

While Winnebago has been a decent performer from a Uniform return on assets “ROA” standpoint, the drop in its sales and changes in guidance point to a broader macroeconomic trend that could threaten it.

Zero-interest loans are piling up and so are late payments. 

American consumers are relying more and more on credit cards and “Buy Now, Pay Later” (BNPL) arrangements to finance not only their discretionary spending but also their daily needs.

According to the latest data from the Federal Reserve Bank of New York, U.S. household debt has hit a record-breaking $18.2 trillion, with approximately 77% of families carrying some form of debt and the median household owing over $80k.

Worse, American consumers are struggling to meet their debt obligations, as BNPL giant Klarna just reported a 17% year-over-year rise in consumer credit losses. 

The rise in credit card debt and delinquency points to the possibility of a new credit crisis that will lead to a contraction in consumer spending.

And as households experience more financial strain, they will turn to cost-cutting measures like reductions in luxury and discretionary spending to fund their day-to-day needs and meet their existing debt obligations.

This, in turn, could impact Winnebago’s ability to deliver future returns.

We can see what the market thinks through our Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today.

At the current stock price, the market expects that Winnebago’s Uniform ROA will rise to around 10% from 7% last year, far below historical levels.

Simply said, the market isn’t expecting a recovery anytime soon. 

And with signs pointing to a looming consumer credit crisis, Winnebago could become a casualty if consumer spending grinds to a halt.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research

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