LCII – Market expectations are for significant declines in Uniform ROA, but management is confident about operating margins, acquisitions, and market conditions
October 23, 2019
LCI Industries (LCII:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 15.4x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about recent operating margin improvements, their acquisition strategy, and improving market conditions
Specifically, management is confident the RV industry is in the late stages of inventory correction and that 25% of the RV market will move from manual jacks to electric jacks in 2019. Furthermore, they are confident their recent acquisitions play into their long-term goal to build their European business, and they are confident they have improved operating margin both sequentially and year-over-year. Moreover, they are confident weather-related sales headwinds improved markedly in July.