Expect Camping World's Growth To Be Bolstered By Acquisitions, New Stores

A favorable industry backdrop should enable Camping World Holdings Inc CWH to drive top-line and EBITDA growth through M&A, but a deceleration in industry shipment growth could weigh on the stock’s multiple.

Goldman Sachs’ David Tamberrino initiated coverage of the company with a Neutral rating and a six-month price target of $24.

Camping World has a “highly variable cost business model,” which is likely to provide downside support in case the company’s top-line declines, Tamberrino stated.

Earlier this month, Camping World acquired Quality RV and expects to open a full-service retail store in December, according to Daily Herald.

Core Growth Drivers

Tamberrino mentioned two drives of growth for Camping World:

1. The company could achieve industry-leading revenue growth, boosted by M&A. The analyst projected a 5.5 percent revenue CAGR from 2015 through 2018, driven by RV industry growth in the near term and “a continued roll-up of smaller “mom and pop” locations further out as the RV cycle matures.”
2. Good Sam make steady growth and strong EBITDA and FCF contributions. Camping World could generate steady top-line growth, with customer penetration increasing for service plans, while Good Sam is expected to contribute 25 percent of the company’s EBITDA and 50 percent of FCF.

Camping World made its debut on the New York Stock Exchange on October 7.