FOREST CITY - An analysis on paper was confirmed in person, four Drake University students said after an April 8 tour of Winnebago Industries.
Jeff Konrad, Brett Vondra, Sean Phillips and Zach Diestler are on a CFA Investment Research Challenge Team at Drake. The team's project was to analyze Winnebago's stock to recommend a sell, hold or buy option.
The team won a state competition to advance to regional competition last week.
"I just had no clue how big the campus would be," Diestler said. "It was eye-opening seeing an American company doing that type of work."
"Today, the biggest thing was the quality," Vondra said. Watching production, "reinforced what we thought."
"Talking with the tour guide about the reasons for the move to Oregon," Konrad said. "Capacity is an issue."
Konrad was referring to the company's recent purchase of a motor home facility in Junction City, Oregon. Winnebago will make high-end diesel products in Oregon.
"The building out there is more suitable for that," Vondra said.
"We picked up on the morale," Phillips said. "Employees said 'hi' to us as we walked by. That's a positive thing you never see in the financial (documents)."
"Those are things you can't get from (documents)," Konrad said of what was revealed in the tour.
The on-site visit information would help in last week's regional competition in Chicago, the team said.
But it didn't change the team's analysis of Winnebago stock.
The team advises a hold of Winnebago stock.
"We wouldn't recommend buying or selling at this time," Phillips said.
It's not time to buy or sell until stock reaches certain price points and margin levels, team members said.
Still, "It's a good company," Diestler said. And no red flags appeared.
Yet, the company needs to improve its performance and market share, team members said.
"One thing that comes to mind is towables," Phillips said. The company has room to improve on its market share in towables, he said.
But the recreational vehicle industry has slim profit margins, Phillips said. "You worry about margins. Any company with margins so slim should be cautious."
Konrad said the fact that the company doesn't have long-term debt makes it very stable. That's a big factor in Winnebago's favor.
No debt means it better handles downturns, Konrad said.
When they visited the company they saw the attention to quality and other factors they learned about in their research.
Team members said they didn't know much about Winnebago before they started their project.
Winnebago Public Relations Specialist Sam Jefson said he was impressed by how much the students had learned through their project.
Diestler said he's listened to many earnings conference calls and poured through other financial documents and he was impressed by the honesty in all of it. That surprised him, Diestler said.
Konrad said he was surprised with how well-connected the company in rural North Iowa was with dealerships across the U.S. and in Canada.
Phillips was surprised by the integration of Winnebago Industries.
He and Vondra said Winnebago also differed from another motor home manufacturer they studied in terms of focus on quality.
Winnebago very much focused on quality control, the team members said.
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