Camping World (CWH)

Recreational vehicle (RV) and boat retailer Camping World (NYSE:CWH) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 3.6% year on year to $1.41 billion. Its non-GAAP loss of $0.16 per share was 21.6% above 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.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $6.15 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 sales grew at a sluggish 4.2% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts).

This quarter, Camping World’s revenue grew by 3.6% year on year to $1.41 billion, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 7.7% over the next 12 months, an acceleration versus the last six years. This projection is healthy and suggests its newer products will fuel better top-line performance.

Number of Stores

Over the last two years, Camping World opened new stores at a rapid clip by averaging 5% annual growth, among the fastest in the consumer retail sector. This gives it a chance to become a large, scaled business over time.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Note that Camping World reports its store count intermittently, so some data points are missing in the chart below.

Same-Store Sales

The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.

Camping World’s demand has been shrinking over the last two years as its same-store sales have averaged 14.3% annual declines. This performance is concerning - it shows Camping World artificially boosts its revenue by building new stores. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its store base.

Note that Camping World reports its same-store sales intermittently, so some data points are missing in the chart below.

Gross profit margins are an important measure of a retailer’s pricing power, product differentiation, and negotiating leverage.

Camping World has bad unit economics for a retailer, giving it less room to reinvest and grow its presence. As you can see below, it averaged a 30.1% gross margin over the last two years. Said differently, Camping World had to pay a chunky $69.89 to its suppliers for every $100 in revenue.

Camping World’s gross profit margin came in at 30.4% this quarter, in line with the same quarter last year and exceeding analysts’ estimates by 3.4%. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting it strives to keep prices low for customers and has stable input costs (such as labor and freight expenses to transport goods).

Camping World was profitable over the last two years but held back by its large cost base. Its average operating margin of 3.1% was weak for a consumer retail business. This result isn’t too surprising given its low gross margin as a starting point.

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. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Camping World generated an operating profit margin of 1.5%, up 1.2 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, and administrative overhead.

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.

Camping World’s full-year EPS turned negative over the last five years. In a mature sector such as consumer retail, we tend to steer our readers away from companies with falling EPS because it could imply changing secular trends and preferences. If the tide turns unexpectedly, Camping World’s low margin of safety could leave its stock price susceptible to large downswings.

In Q1, Camping World reported EPS at negative $0.16, up from negative $0.38 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast Camping World’s full-year EPS of negative $0.12 will flip to positive $0.96.

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, an encouraging sign is that Camping World’s margin expanded by 1.3 percentage points over the last year. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Camping World burned through $256 million of cash in Q1, equivalent to a negative 18.1% margin. The company’s cash burn increased from $93.91 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’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 15.1%, slightly better than typical consumer retail business.

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 $7.76 million of cash over the last year, and its $2.48 billion of debt exceeds the $20.92 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.

We were impressed by how significantly Camping World blew past analysts’ EPS and EBITDA expectations this quarter. On the other hand, its revenue slightly missed. Zooming out, we think this was a solid quarter. The stock traded up 2.8% to $14.50 immediately after reporting.

Updated: May 22, 2025 at 10:33 PM EDT

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Camping World, you should also grasp the company’s longer-term business quality and valuation.

Camping World isn’t a terrible business, but it isn’t one of our picks. For starters, its revenue growth was a little slower over the last six years, and analysts expect its demand to deteriorate over the next 12 months. And while its new store openings have increased its brand equity, the downside is its shrinking same-store sales tell us it will need to change its strategy to succeed. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Camping World’s P/E ratio based on the next 12 months is 16.5x. This valuation tells us a lot of optimism is priced in - we think there are better investment opportunities out there.

Wall Street analysts have a consensus one-year price target of $20.17 on the company (compared to the current share price of $15.85).

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.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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