Camping World (CWH)

Recreational vehicle (RV) and boat retailer Camping World (NYSE:CWH) reported Q4 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 2.6% year on year to $1.17 billion. Its non-GAAP loss of $0.73 per share was 53.9% below analysts’ consensus estimates.

Company Overview

Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities.

Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need.

Competitors offering merchandise for outdoor activities or recreational vehicles include Thor Industries (NYSE:THO) and Winnebago Industries (NYSE:WGO) as well as private competitors such as Lazydays Holdings and General RV Center.

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $6.37 billion in revenue over the past 12 months, Camping World is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Camping World’s demand was weak over the last three years. Its sales fell by 2.9% annually as it didn’t open many new stores.

This quarter, Camping World’s revenue fell by 2.6% year on year to $1.17 billion but beat Wall Street’s estimates by 1.2%.

Looking ahead, sell-side analysts expect revenue to grow 3.6% over the next 12 months, an acceleration versus the last three years. This projection is above the sector average and implies its newer products will catalyze better top-line performance.

Number of Stores

A retailer’s store count often determines how much revenue it can generate.

Camping World listed 196 locations in the latest quarter and has kept its store count flat over the last two years while other consumer retail businesses have opted for growth.

When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.

Camping World’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and we’d be skeptical if Camping World starts opening new stores to artificially boost revenue growth.

In the latest quarter, Camping World’s same-store sales fell by 2.6% year on year. This decline was a reversal from its historical levels.

We prefer higher gross margins because they not only make it easier to generate more operating profits but also indicate product differentiation, negotiating leverage, and pricing power.

Camping World has bad unit economics for a retailer, signaling it operates in a competitive market and lacks pricing power because its inventory is sold in many places. As you can see below, it averaged a 29.7% gross margin over the last two years. That means Camping World paid its suppliers a lot of money ($70.31 for every $100 in revenue) to run its business.

Camping World produced a 28.8% gross profit margin in Q4, down 2.5 percentage points year on year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting it strives to keep prices low for customers and has stable input costs (such as labor and freight expenses to transport goods).

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Camping World’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 2.6% over the last two years. This profitability was lousy for a consumer retail business and caused by its suboptimal cost structureand low gross margin.

Looking at the trend in its profitability, Camping World’s operating margin might fluctuated slightly but has generally stayed the same over the last year, meaning it will take a fundamental shift in the business model to change.

This quarter, Camping World generated an operating margin profit margin of negative 4.3%, down 3 percentage points year on year. Since Camping World’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Camping World, its EPS declined by 69.4% annually over the last three years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

In Q4, Camping World reported adjusted EPS of negative $0.73, down from negative $0.47 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Camping World’s full-year EPS of $0.12 to grow 558%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Camping World broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.

Taking a step back, we can see that Camping World’s margin dropped by 6.6 percentage points over the last year. Almost any movement in the wrong direction is undesirable because of its already low cash conversion. If the trend continues, it could signal it’s becoming a more capital-intensive business.

Camping World burned through $272.5 million of cash in Q4, equivalent to a negative 23.2% margin. The company’s cash burn increased from $186 million of lost cash in the same quarter last year.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Camping World historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 12.7%, somewhat low compared to the best consumer retail companies that consistently pump out 25%+.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Camping World burned through $261.4 million of cash over the last year, and its $2.48 billion of debt exceeds the $215 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

Unless the Camping World’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Camping World until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

It was good to see Camping World narrowly top analysts’ revenue expectations this quarter. On the other hand, its EBITDA missed and its gross margin fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 7.2% to $10.05 immediately after reporting.

Before making an investment decision, investors should account for Camping World’s business fundamentals and valuation in addition to what happened in the latest quarter.

We cheer for all companies serving everyday consumers, but in the case of Camping World, we’ll be cheering from the sidelines. First off, its revenue has declined over the last three years. While its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining EPS over the last three years makes it a less attractive asset to the public markets. On top of that, its gross margins make it more challenging to reach positive operating profits compared to other consumer retail businesses.

Camping World’s P/E ratio based on the next 12 months is 13.7x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - you can find more timely opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $17.58 on the company (compared to the current share price of $10.05).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.