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Thor Industries Inc THO

Morningstar Rating
$117.34 +2.71 (2.36%)
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Company Report

Thor Earnings: To Us, Guidance Cut Is Not as Bad as It May Seem

Thor’s stock fell by over 14% during March 6 trading after the firm’s fiscal 2024 second quarter saw management lower full-year guidance. We don’t see a permanent demand problem for the recreational vehicle industry in North America, we instead see the guidance change resulting from a delay in an inevitable inventory restocking, so we are leaving our fair value estimate in place. Management expected a second-half fiscal 2024 recovery in dealer demand, but that timing is now later in fiscal 2024 due to high interest rates and dealers remaining cautious on accumulating inventory when they still have 2023 model year product to sell. Inventories are low per Thor and 2025 model year product comes out in July, so we don’t see dealers keeping inventory low forever and we think high interest rates, rather than a lack of consumer demand, are delaying an inventory rebuild. Management is combating these dealer fears with more incentive spending, especially in motorhomes, but this means full-year gross margin is now expected to be 14.0%-14.5%, down from 14.5%-15%. That change, along with about $500 million less revenue guided, led to diluted earnings per share guidance falling to $5.00-$5.50 from $6.25-$7.25.

Price vs Fair Value

THO is trading at a 22% discount.
Price
$109.83
Fair Value
$866.00
Uncertainty
Very High
1-Star Price
$163.16
5-Star Price
$49.40
Economic Moat
Csgd
Capital Allocation
Mglzcpyv

Bulls Say, Bears Say

Bulls

Thor Industries has positioned itself as the largest RV manufacturer in North America and second-largest RV manufacturer in Europe, which should disproportionately benefit the company as the industry returns to growth.

Bears

Thor operates over 30 brands across North America and Europe, which we believe has driven some brand dilution impacting margins.

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News

Trading Information

Previous Close Price
$114.63
Day Range
$114.49117.80
52-Week Range
$74.50129.31
Bid/Ask
$116.54 / $118.20
Market Cap
$6.26 Bil
Volume/Avg
422,673 / 496,597

Key Statistics

Price/Earnings (Normalized)
22.32
Price/Sales
0.61
Dividend Yield (Trailing)
1.59%
Dividend Yield (Forward)
1.64%
Total Yield
2.33%

Company Profile

Based in Elkhart, Indiana, Thor Industries manufactures Class A, Class B, and Class C motor homes along with travel trailers and fifth wheel towables across over 30 brands. Through the acquisition of Erwin Hymer in 2019, the company expanded its geographic footprint and now produces various motorized and towable recreational vehicles for Europe, including motorcaravans, campervans, urban vehicles, caravans, and other RV-related products and services. The company has also begun generating revenue through aftermarket component parts through the acquisition of Airxcel in 2021, however, this is still a nascent part of the business as it accounts for less than 10% of total sales. In fiscal 2023, the company wholesaled 187,015 units and generated over $11.1 billion in revenue.
Sector
Consumer Cyclical
Industry
Recreational Vehicles
Stock Style Box
Small Value
Total Number of Employees
24,900

Competitors

Valuation

Metric
THO
WGO
PII
Price/Earnings (Normalized)
22.3212.9610.93
Price/Book Value
1.591.643.99
Price/Sales
0.610.770.65
Price/Cash Flow
11.3110.568.37
Price/Earnings
THO
WGO
PII

Financial Strength

Metric
THO
WGO
PII
Quick Ratio
0.591.420.35
Current Ratio
1.752.841.39
Interest Coverage
4.779.485.96
Quick Ratio
THO
WGO
PII

Profitability

Metric
THO
WGO
PII
Return on Assets (Normalized)
4.03%5.17%9.71%
Return on Equity (Normalized)
7.56%9.28%42.30%
Return on Invested Capital (Normalized)
6.80%6.93%18.29%
Return on Assets
THO
WGO
PII
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Recreational Vehicles Industry Comparables

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Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
BC
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HOG
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PII
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DOOO
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LCII
LCI Industries IncWxyhg$3.1 Bil
WGO
Winnebago Industries IncQdmcsmhtRtltk$2.2 Bil
MBUU
Malibu Boats Inc Class ADfcfwjktsHykczs$884.2 Mil
MPX
Marine Products CorpSmnzp$407.5 Mil
MCFT
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