CWH: Market Share Gains Will Drive Entry-Level Demand Amid Retail Shifts

Key Takeaways

• Expansion of remote work and affordable offerings are attracting new customers, increasing repeat purchases, and supporting sustained revenue and margin growth.
  
• Operational efficiency, digital investments, and demographic trends are driving higher store productivity, stable demand, and improved profitability.
  
• Heavy reliance on affordable RVs, inventory risks, and shifting consumer trends threaten Camping World's revenue, profitability, and market share amid rising operational and financial pressures.

Catalysts

Together its subsidiaries, retails recreational vehicles (RVs), and related products and services in the United States.

• The growing trend of remote work and flexible living is expanding the pool of potential RV customers, which is likely to drive ongoing increases in unit volumes, new customer acquisitions, and broader adoption of Camping World's products and membership ecosystem. This supports top-line revenue growth and recurring earnings through lifetime customer value.
  
• Camping World's focus on offering affordable entry-level RVs with compelling features is attracting first-time buyers and accelerating the trade-in cycle, enabling more frequent repeat purchases and upselling across higher-margin goods and services. This is expected to support both ongoing revenue growth and margin improvement as customer LTV rises.
  
• Increased store productivity through consolidation and SG&A cost reductions is unlocking significant operating leverage even while industry shipment trends remain pressured, positioning the company to expand net margins and earnings as volume recovers or stabilizes.
  
• The long-term demographic shift favoring active, outdoor-oriented retirees-combined with continued preference for domestic travel-should underpin stable demand for RV ownership and usage. This secular demand resilience benefits Camping World through higher per-store productivity and durable store traffic, strengthening forward revenue visibility and earnings stability.
  
• Strategic investments in digital capabilities, service/aftermarket expansion, and selective acquisitions are poised to capture incremental market share and yield higher-margin, less-cyclical revenue streams, directly contributing to future improvements in both top-line growth and overall profitability.

Camping World Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Camping World Holdings's revenue will grow by 4.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from -0.1% today to 5.5% in 3 years time.
• Analysts expect earnings to reach $392.7 million (and earnings per share of $3.62) by about September 2028, up from $-8.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.4x on those 2028 earnings, up from -132.5x today. This future PE is lower than the current PE for the US Specialty Retail industry at 19.2x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.0%, as per the Simply Wall St company report.

Camping World Holdings Future Earnings Per Share Growth

Risks

• Camping World is increasingly reliant on selling entry-level and lower-priced RVs to attract new customers, but this approach could face challenges if long-term demographic trends result in younger generations showing less interest in RV ownership, potentially leading to sustained revenue declines.
  
• The company acknowledged a high level of used inventory per store-being "probably slightly over inventoried"-which raises the risk of inventory obsolescence or markdowns if demand cools, negatively impacting gross margins and overall profitability.
  
• Persistent affordability concerns, driven by tariffs, manufacturer price increases, and uncertain interest rates, may structurally reduce the pool of potential buyers as the middle class contracts or consumer preferences shift, putting downward pressure on future revenue streams.
  
• Camping World's capital allocation has prioritized deleveraging over aggressive dealership acquisition, but it remains exposed to risks from prior periods of high debt and ongoing integration costs, which could limit financial flexibility and compress net margins in a more challenging environment.
  
• Although management touts contract manufacturing and operational improvements as competitive advantages, industry-wide consolidation among OEMs and rising direct-to-consumer digital channels could erode market share and force increased capital outlays to modernize, impacting both margins and required investment levels.

Valuation

• The analysts have a consensus price target of $20.417 for Camping World Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $27.0, and the most bearish reporting a price target of just $14.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.1 billion, earnings will come to $392.7 million, and it would be trading on a PE ratio of 8.4x, assuming you use a discount rate of 9.0%.
• Given the current share price of $17.27, the analyst price target of $20.42 is 15.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.