Financials
The company generated total revenues $3.3 billion in 2015, which was a 21.3 percent five-year CAGR. For the first six months of 2016 that ended on June 30, the company generated total revenues of $1.89 billion. Camping World Holdings reports net income for the first six months of 2016 was $109.8 million. For 2015, its net income was $158.6 million. Camping World derives approximately 93% of its revenue from the sale of RVs, parts, accessories, finance and insurance, while services plans make up the rest.
In its SEC filing, the company stated its intention to use the net proceeds of the IPO to repay $200.4 million of outstanding debt and the rest for general corporate purposes.
IPO Performance Details
Camping World Holdings Inc (NYSE:CWH) went public on 10.6 and raised $250 million through its offer of 11.4 million shares. The company priced at $22, within the initial price range of $21 to $23. It opened higher at $23.75 in its market debut and finished the trading day up 2.3 percent. The stock then dipped 1.2 percent in after-market returns. Shares are now trading just slightly above IPO price at $22.67 (10.25 market close).
Conclusion: Buying Opportunity
Numerous studies have found evidence supporting a temporary boost in stock price in the days surrounding a company’s quiet period expiration. The rationale behind this boost is that, for the first time since a company has gone public, its underwriters are allowed to release reports and recommendations. These reports tend to be positive and result in upward movement for the stock price. Savvy investors, anticipating this uptick, often purchase shares ahead of the event, creating additional momentum.
Our own firm – DRD Investments, LLC – has investigated this phenomenon and found that purchasing shares 5 days prior to the quiet period expiration and selling 2 days afterwards resulted in above-market returns of over 2%. Other factors which were shown to impact return was the industry of the company, stock performance since its IPO, and strength of the underwriters.
Camping World Holdings Inc (NYSE:CWH) has a strong history of profits and growth.
Our research indicates that the expiration of quiet periods often results in a boosts in share prices.
We recommend that investors consider purchasing shares during the remainder of this trading week in advance of the quiet period expiration to take advantage of the likely increase. Investors should sell shares after the release of underwriter reports and recommendations on November 2nd.
Disclosure: I am long shares of CWH.
Note: This article is written by Don Dion. Visit his site at DRD Investments for expert analysis on current and upcoming IPOs.
