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Camping World: Momentum Stinks

1/2/19 Update 
Camping World announced a major reorg including the hiring of a new CFO. The sudden resignation of the President of RV Operations looks more and more like a personal decision due to a disagreement with the organizational shifts and his new place in the business.

The stock is up about 5% to $12. Considering these reorgs usually occur when business is struggling, the recommendation isn't to jump into the stock on the rip. Continue to use dips to buy Camping World for the long term as 2019 could be another rough year.

Original Article 
The last thing a weak stock needs is an executive departure. Camping World (CWH) is crashing to new lows based on the surprise resignation of the President of RV Operations.

One of the reasons to invest in Camping World was the solid management team lead by CEO Marcus Lemonis and other executives like Roger Nuttall with decades of experience in the industry. Naturally, the market is worried by a surprise move on a Friday evening during the holidays.

On October 1, Brent Moody was promoted to co-CEO while Mr. Nuttall was mentioned as an after thought in the management team. The departure could easily be due to disappointment in him not getting the promotion.

Either way, the market is telling a story suggesting potential weakness in the RV operations. The stock ended down 7.5% on the last trading day of the year, but the stock didn't hit new lows. Holding the $11 lows would be the first signs of a real bottom.

Due to all the fears surrounding the slowing economy and higher interest rates, naturally EPS estimates are in decline. Notable 2020 estimates are still up around $3 per share while the stock is down at $11.50. The stock will turn as these EPS estimates trough.

The recent Winnebago (WGO) earnings suggest the sector isn't falling apart. Camping World is still facing Gander Mountain integration issues as much as the market weakness. The problem remains fears that the sector only gets worse before getting better.

The key investor takeaway is that Camping World remains a strong company consolidating the domestic RV industry. Some integration headwinds hurt results this year, but the company has a strong management team. The only question is whether the stock and the industry bottoms here. For this reason, it's still too early to rush into the stock though investors can start building positions.

More Research:
Camping World: Buy The Weakness Slowly  ($$$)

Disclosure: No position. Please review the disclaimer page for more details. 


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