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Category: Stock Market and Thor Industries
Date: 9 December 2019 Stock Price: $65.56 We take a look at the 1st quarter earnings release of their 2020 fiscal year of Thor Industries the world's largest manufacturer of recreational vehicles (RVs)
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About Thor Industries
Thor Industries, Inc. was founded on August 29, 1980, when Wade F. B. Thompson and Peter B. Orthwein acquired Airstream, the most recognized name in the industry. Despite its venerable image, Airstream had not fared well during the economic downturn of the late 1970s. By focusing on improving quality while reducing costs, Airstream returned to profitability in its very first year under the new Thor management. Thor is the sole owner of operating subsidiaries that, combined, represent the world’s largest manufacturer of recreational vehicles (RVs').
The group sells towable RVs and motorized RV's in markets such as North America and Europe.
The group sells towable RVs and motorized RV's in markets such as North America and Europe.
Overview of Thor Industries' 1st quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
- Net sales: $2.158 billion (up from $1.755 billion from the same quarter of the previous year)
- Sales increased by 22.9% over the last 12 months
- Net income $51 065 million (up from $13.953million for the same quarter of the previous year)
- Diluted earnings per share: $0.92 (up from $0.26 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 55.224 million (down from 52.899 million for the same quarter of the previous year)
- Cash and cash equivalents: $270.482 million
- Cash and cash equivalents per share: $4.89
- Cash and cash equivalents makes up 7.47% of Thor Industries' market capital
- Cash and cash equivalents makes up 4.8% of Thor Industries' total assets
- Inventories: $915.485 million
- Inventories makes up 16.3% of Thor Industries' total assets
- Accounts receivable: $776.572 million
- Accounts receivable makes up 13.8% of Thor Industries' total assets
- Stockholders equity in Thor Industries: $2.142 billion
- Stockholders equity per share for Thor Industries: $38.46
- Thor Industries is trading at 1.70 times its stockholders equity per share, which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
Thor Industries' management commentary on their 1st quarter 2020 earnings report
ELKHART, Ind., Dec. 9, 2019 /PRNewswire/ -- Thor Industries, Inc. (NYSE: THO) today announced results for the first quarter of fiscal 2020 ended October 31, 2019.
"In our fiscal first quarter, we achieved a pronounced improvement in our operating results, reflecting the benefits of the flexible and highly variable cost model we have developed, as we increased gross profit margins in our North American RV segments despite modest decreases in net sales," commented Bob Martin, President and CEO of Thor Industries. "EHG's results for the quarter were generally in line with expectations as EHG has historically generated flat-to-negative first quarter results due to the European holiday shutdowns that occur in August, and due to the higher concentration of marketing and advertising expenses in the fiscal first quarter to support the annual RV shows in Europe. Industry conditions in North America continued to improve as the independent dealer inventory rationalization that has affected our results over the past year nears its end. Dealer optimism is strong in both the North American and European markets with excellent feedback from our September Open House in Elkhart, Indiana, and positive performance at industry wholesale and retail shows in Germany and across the United States. We look forward to continuing that momentum as the spring RV show season starts in North America in January and the European selling season begins."
"In our fiscal first quarter, we achieved a pronounced improvement in our operating results, reflecting the benefits of the flexible and highly variable cost model we have developed, as we increased gross profit margins in our North American RV segments despite modest decreases in net sales," commented Bob Martin, President and CEO of Thor Industries. "EHG's results for the quarter were generally in line with expectations as EHG has historically generated flat-to-negative first quarter results due to the European holiday shutdowns that occur in August, and due to the higher concentration of marketing and advertising expenses in the fiscal first quarter to support the annual RV shows in Europe. Industry conditions in North America continued to improve as the independent dealer inventory rationalization that has affected our results over the past year nears its end. Dealer optimism is strong in both the North American and European markets with excellent feedback from our September Open House in Elkhart, Indiana, and positive performance at industry wholesale and retail shows in Germany and across the United States. We look forward to continuing that momentum as the spring RV show season starts in North America in January and the European selling season begins."
"During the quarter, we continued to reduce acquisition-related debt levels. To date, we have repaid approximately $500 million on the acquisition-related debt. Our cash priorities remain the same. We will use our cash to fund operations, to pay down our acquisition-related debt, to continue to pay our regular dividend and to evaluate share repurchases strategically and opportunistically," said Colleen Zuhl, Thor's Senior Vice President and Chief Financial Officer.
Integration Update
Bob Martin commented, "Our integration is advancing as planned and we are making progress in a number of areas. We are already leveraging our global supply chain relationships to enhance our material spend and are also leveraging efficiencies across our global operations. Additionally, our international product transfer team is aggressively developing a plan to manufacture EHG products in North America and we expect to release additional details regarding their efforts shortly."
Outlook
"We are optimistic about our prospects for improved results in fiscal 2020, particularly following such a solid start to the fiscal year," Bob Martin continued. "Attendance and feedback from recent shows in Düsseldorf, Germany; Hershey, Pennsylvania; Fontana, California; and our Open House in Elkhart, Indiana, have been very positive.
"We expect the independent dealer inventory rationalization to be complete by the end of the calendar year, and believe this process, in both North America and Europe, has largely run its course. "Consistent with our comments from last quarter, our outlook for North American markets is to remain relatively flat, or decline modestly, in fiscal 2020, barring a significant macroeconomic change, with the potential for better results should retail demand strengthen. For the European retail market, we expect to see modest growth similar to fiscal 2019.
"Finally, at our recent Investor Day in Germany, we introduced our long-term financial goals. We believe we will achieve $14 billion in annual net sales, attain sustainable gross margins of 16%, and generate more than $3 billion in cumulative net cash from operations by the end of fiscal 2025. We believe that the long-term outlook for the RV industry and for Thor Industries is compelling, and we look forward to regularly reporting on our progress toward these goals," Martin concluded.
Integration Update
Bob Martin commented, "Our integration is advancing as planned and we are making progress in a number of areas. We are already leveraging our global supply chain relationships to enhance our material spend and are also leveraging efficiencies across our global operations. Additionally, our international product transfer team is aggressively developing a plan to manufacture EHG products in North America and we expect to release additional details regarding their efforts shortly."
Outlook
"We are optimistic about our prospects for improved results in fiscal 2020, particularly following such a solid start to the fiscal year," Bob Martin continued. "Attendance and feedback from recent shows in Düsseldorf, Germany; Hershey, Pennsylvania; Fontana, California; and our Open House in Elkhart, Indiana, have been very positive.
"We expect the independent dealer inventory rationalization to be complete by the end of the calendar year, and believe this process, in both North America and Europe, has largely run its course. "Consistent with our comments from last quarter, our outlook for North American markets is to remain relatively flat, or decline modestly, in fiscal 2020, barring a significant macroeconomic change, with the potential for better results should retail demand strengthen. For the European retail market, we expect to see modest growth similar to fiscal 2019.
"Finally, at our recent Investor Day in Germany, we introduced our long-term financial goals. We believe we will achieve $14 billion in annual net sales, attain sustainable gross margins of 16%, and generate more than $3 billion in cumulative net cash from operations by the end of fiscal 2025. We believe that the long-term outlook for the RV industry and for Thor Industries is compelling, and we look forward to regularly reporting on our progress toward these goals," Martin concluded.
Thor Industries (NYSE: THO) stock price history
The image below, obtained from Google, shows the stock price history of Thor industries (NYSE: THO) over the last 5 years. And it's not been a very good time for Thor industries (NYSE: THO) stockholders. 5 years ago the stock was trading at around $52 and its currently trading at $48.92.
Thor industries (NYSE: THO) is also trading at a lot closer to its 52 week low of $42.05 than it is to its 52 week high of $86.04 which to us is a clear indication that the short term sentiment and momentum of Thor industries stock is very negative.
Thor industries (NYSE: THO) is also trading at a lot closer to its 52 week low of $42.05 than it is to its 52 week high of $86.04 which to us is a clear indication that the short term sentiment and momentum of Thor industries stock is very negative.
Recent coverage of Thor Industries
The extract below covers the latest regarding Thor Industries
Thor Industries (THO) - Get Report reported better-than-expected earnings per share before the open on Dec. 9. The recreational-vehicle maker thus beat estimates for a second consecutive quarter after a streak of five negative reports. The stock is trying to recover from a huge bear-market decline.
My call is to buy the stock on weakness to its 200-day simple moving average at $58.73 and add to positions at its monthly value level at $55.17. Book profits on strength to its weekly risky level at $76.51.
A problem for the mobile-home and RV company has been an inability to beat revenue estimates over the past four quarters. The stock has been on the rebound in 2019, closing at $67.77 on Dec. 6. That’s a gain of 30% year to date and in bull-market territory 61% above its Aug. 15 low of $42.05.
Read the full article here
Thor Industries (THO) - Get Report reported better-than-expected earnings per share before the open on Dec. 9. The recreational-vehicle maker thus beat estimates for a second consecutive quarter after a streak of five negative reports. The stock is trying to recover from a huge bear-market decline.
My call is to buy the stock on weakness to its 200-day simple moving average at $58.73 and add to positions at its monthly value level at $55.17. Book profits on strength to its weekly risky level at $76.51.
A problem for the mobile-home and RV company has been an inability to beat revenue estimates over the past four quarters. The stock has been on the rebound in 2019, closing at $67.77 on Dec. 6. That’s a gain of 30% year to date and in bull-market territory 61% above its Aug. 15 low of $42.05.
Read the full article here
Thor Industries (NYSE: THO) latest stock valuation
So what are Thor Industries stock worth based on the release of their latest earnings report and the outlook provided. Based on the earnings reported our valuation models provide a target (full value) price for Thor Industries of $57.20 a stock (up significantly from our last valuation of Thor Industries largely due to their improved prospects for the next fiscal year).
We therefore believe that Thor Industries stock is overvalued and we would not recommend long term fundamental or value investors buy into the stock of Thor Industries at its current price.
We usually recommend that long term fundamental or value investors look to enter the stock at least 10% below our target (full value) price, which in this case is $57.20 in this case. A good entry into the stock of Thor Industries (THO) would therefore be at $51.50 or below. We expect that stock of Thor Industries to pull back from current levels to levels closer to our target (full value) price in coming weeks and months.
We therefore believe that Thor Industries stock is overvalued and we would not recommend long term fundamental or value investors buy into the stock of Thor Industries at its current price.
We usually recommend that long term fundamental or value investors look to enter the stock at least 10% below our target (full value) price, which in this case is $57.20 in this case. A good entry into the stock of Thor Industries (THO) would therefore be at $51.50 or below. We expect that stock of Thor Industries to pull back from current levels to levels closer to our target (full value) price in coming weeks and months.
Next earnings release of Thor Industries
It is expected that Thor Industries will release their 2nd quarter 2020 earnings report in early March 2020