Research

LCII – Market expectations are for significant declines in Uniform ROA, but management is confident about operating margins, acquisitions, and market conditions

  • 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.