Although investment firm AG Edwards & Sons believes Monaco Coach Corp. will increase its Class A motorhome market share this year, it has lowered its year 2001 earnings estimate for the company.
AG Edwards now believes Monaco will earn $1.96 per share during 2001. Earlier, it estimated Monaco would earn $2.40 a share this year.
The investment firm surveyed 45 RV dealers during December and a significant number reported that retail demand fell-off sharply late last year. AG Edwards does not believe that trend will be reversed in the near term, so RV company profit margins will be squeezed by the need to lower prices to encourage sales.
AG Edwards believes Class A motorhome shipments will decline 14% in 2001 and that Monaco’s Class A shipments will be 5.8% lower. This means Monaco’s market share in Class A’s would increase to 18% this year, compared with about 14.8% during 2000.
Basically, AG Edwards believes RV industry year 2001 earnings estimates are too optimistic because it does not believe that anticipated interest rate cuts will be enough to greatly stimulate the wholesale or retail markets this year.
However, AG Edwards continues to view Monaco stock as an attractive long-term investment because of the RV industry’s favorable demographics.
In 2002, AG Edwards estimates Monaco will earn $2.26 a share, the same amount it earned during 1999.