Bear of the Day: Camping World (CWH)

The stock market can be a cruel place sometimes. Just when you think things can't get any worse, the selling continues. That's especially true for companies that are struggling to find their footing in an economy where consumers are becoming increasingly selective about how they spend their money. Big-ticket discretionary purchases are particularly vulnerable. When financing costs are high and consumers are feeling the pinch, buying a new recreational vehicle isn't exactly at the top of everyone's priority list.

That's creating some serious headaches for today's Bear of the Day, Zacks Rank #5 (Strong Sell) Camping World (CWH). Camping World Holdings is one of the nation's largest retailers of recreational vehicles. The company operates a network of RV dealerships, offering new and used motorhomes, travel trailers, and fifth wheels. It also provides financing, insurance, service, maintenance, and accessories through its Camping World and Good Sam brands.

It's a business that benefited tremendously from the pandemic-era boom in outdoor recreation. Consumers had money to spend, financing was cheap, and RV sales were booming. Unfortunately, that environment has changed considerably. Higher borrowing costs, affordability pressures, and a more cautious consumer have created a much more challenging backdrop for the RV industry.

That weakness is showing up where it matters most to us here at Zacks. I'm talking about earnings estimates. Over the last thirty days, four analysts have lowered their earnings estimates for the current year. Not a single analyst has increased estimates during that period. The bearish sentiment has pushed the Zacks Consensus Estimate for the current year down from 36 cents to just 20 cents per share. That's a decline of nearly 44% in only two months.

Next year's numbers aren't looking much better. Four analysts have also cut their estimates for the following year, pushing the consensus down from 87 cents to 56 cents per share. That's a reduction of more than 35%. Those downward revisions are the primary reason Camping World currently carries a Zacks Rank #5 (Strong Sell).

Camping World Price and Consensus

Camping World price-consensus-chart | Camping World Quote

The industry backdrop isn't doing the company any favors either. Camping World is part of the Automotive – Original Equipment industry, which ranks in the Bottom 13% of our Zacks Industry Rank. That's not exactly the sort of neighborhood I want to be shopping in when the broader market is already dealing with uncertainty.

There are a few stocks in this industry that are in the good graces of our Zacks Rank. These include Zacks Rank #2 (Buy) stocks Adient (ADNT) and ChargePoint (CHPT)

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This article originally published on Zacks Investment Research (zacks.com).

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