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Category: Stock Market and Thor Industries (THO)
Date: 9 December 2020 Stock Price of Thor Industries: $95.68 We take a look at the 1st quarter earnings release of their 2021 fiscal year of Thor Industries the world's largest manufacturer of recreational vehicles (RVs). The group reported net sales of $2.54 billion for the quarter and net income for the quarter came in at $113.8 million.
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We are pleased to report a solid start to our fiscal year with strong year-over-year growth across all of our major metrics, including net sales, gross margin and net income attributable to THOR. Our backlog continued to increase in the first quarter, setting a record, while dealer inventories continued to decline as many of our product shipments are going directly to fill existing end-customer orders- Bob Martin, President and CEO of THOR Industries."
About Thor Industries (THO)
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' 4th quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
- Net sales: $2.54 billion (down from $2.16 billion from the same quarter of the previous year)
- Sales increased by 17.6% over the last 12 months
- Net income $113.7 million (up from $51.06 million for the same quarter of the previous year)
- Diluted earnings per share: $2.05 (up from $0.92 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 55.55 million (up from 55.22 million for the same quarter of the previous year)
- Cash and cash equivalents: $340.210 million
- Cash and cash equivalents per share: $6.12
- Cash and cash equivalents makes up 6.4% of Thor Industries' market capital
- Cash and cash equivalents makes up 5.8% of Thor Industries' total assets
- Inventories: $1.038 billion
- Inventories makes up 17.7% of Thor Industries' total assets
- Accounts receivable: $817.6 million
- Accounts receivable makes up 13.9% of Thor Industries' total assets
- Stockholders equity in Thor Industries: $2.420 billion
- Stockholders equity per share for Thor Industries: $43.56
- Thor Industries is trading at 2.2 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.
- For comparison the average price to book value of companies in the S&P 500 is 3.9.
Thor Industries' management commentary on their 1st quarter 2021 earnings
ELKHART, Ind., Dec. 8, 2020 /PRNewswire/ -- THOR Industries, Inc. (NYSE: THO) today announced strong growth for the first quarter of fiscal 2021 which ended October 31, 2020.
"We are pleased to report a solid start to our fiscal year with strong year-over-year growth across all of our major metrics, including net sales, gross margin and net income attributable to THOR. Our backlog continued to increase in the first quarter, setting a record, while dealer inventories continued to decline as many of our product shipments are going directly to fill existing end-customer orders. To address the increase in demand, we have increased production levels. Even with our higher production output and deliveries, demand and backlog for our RV products continue to grow," said Bob Martin, President and CEO of THOR Industries.
"We are working hard to manage through temporary supply chain issues, which are currently common across the entire RV industry. We are confident that once these temporary supply chain constraints are mitigated, our shipments will increase further. We also believe it will take a number of months of production to first fill dealer presold orders before we will begin a restocking cycle to help our dealers get their inventory back to a more historically normal level," added Martin.
"We are pleased to report a solid start to our fiscal year with strong year-over-year growth across all of our major metrics, including net sales, gross margin and net income attributable to THOR. Our backlog continued to increase in the first quarter, setting a record, while dealer inventories continued to decline as many of our product shipments are going directly to fill existing end-customer orders. To address the increase in demand, we have increased production levels. Even with our higher production output and deliveries, demand and backlog for our RV products continue to grow," said Bob Martin, President and CEO of THOR Industries.
"We are working hard to manage through temporary supply chain issues, which are currently common across the entire RV industry. We are confident that once these temporary supply chain constraints are mitigated, our shipments will increase further. We also believe it will take a number of months of production to first fill dealer presold orders before we will begin a restocking cycle to help our dealers get their inventory back to a more historically normal level," added Martin.
"Each of our business segments delivered stronger operating results in the first quarter as compared to the prior-year first quarter. Our improved financial performance demonstrates our ability to successfully ramp up production volumes in response to surging demand while managing our expenses to achieve improved margins and net income in an unusually complex operating environment," said Colleen Zuhl, THOR's Senior Vice President and Chief Financial Officer.
"Historically, our cash flow tends to be seasonal as we build inventory during our first and second fiscal quarters in preparation for the typical demand cycle for our products. This is true again this year, with the added complexity of carrying additional chassis and inventory due to increased production and higher work-in-process levels as a result of temporary supply chain constraints. We expect overall working capital levels to remain elevated given strong market demand but expect our work-in-process to normalize to appropriate levels during the fiscal year as the supply chain stabilizes and we ship completed work-in-process units. We continue to have strong liquidity with $337.4 million of cash and cash equivalents as of October 31, 2020, and approximately $720 million currently available for borrowing under our ABL. Our cash utilization priorities remain consistent with our historical priorities, namely, we will invest in our businesses, grow our dividend over time, further reduce our acquisition-related debt obligations, and support opportunistic strategic investments, including acquisitions, to enhance long-term shareholder value," concluded Zuhl.
Outlook
"Our financial results were very strong for the first quarter, despite the continued challenges we faced as a result of the pandemic. Our teams have done a great job of managing through what continues to be an uncertain operating environment. We view the current chain constraints to be temporary in nature, and expect to achieve continued growth in fiscal 2021 supported by our October 31st backlog of $8.92 billion," said Bob Martin, President and CEO of THOR Industries.
"We believe the long-term growth potential for the RV industry remains very positive. While it is certainly true that the impact of COVID-19 has brought new buyers into our industry, both THOR, specifically, and the industry, generally, were attracting new buyers and saw strong demand independent of the pandemic. People have shown that they appreciate the long-term value proposition RVs offer – affordability, a vacation in a controlled environment, freedom, and outdoor fun. We also believe that the desire by consumers to 'control their own destiny' and have safer, socially distanced vacation activities has been a key factor in driving recent RV demand and will continue to be a factor for the foreseeable future.
"On December 1, 2020, the RVIA updated their most-likely forecast and now expects an increase of 18.7% in calendar 2021 shipments over their most-likely estimate for calendar 2020 shipments. We support their forecast and believe there is potential for upside to this forecast based on current industry conditions," concluded Martin.
"Historically, our cash flow tends to be seasonal as we build inventory during our first and second fiscal quarters in preparation for the typical demand cycle for our products. This is true again this year, with the added complexity of carrying additional chassis and inventory due to increased production and higher work-in-process levels as a result of temporary supply chain constraints. We expect overall working capital levels to remain elevated given strong market demand but expect our work-in-process to normalize to appropriate levels during the fiscal year as the supply chain stabilizes and we ship completed work-in-process units. We continue to have strong liquidity with $337.4 million of cash and cash equivalents as of October 31, 2020, and approximately $720 million currently available for borrowing under our ABL. Our cash utilization priorities remain consistent with our historical priorities, namely, we will invest in our businesses, grow our dividend over time, further reduce our acquisition-related debt obligations, and support opportunistic strategic investments, including acquisitions, to enhance long-term shareholder value," concluded Zuhl.
Outlook
"Our financial results were very strong for the first quarter, despite the continued challenges we faced as a result of the pandemic. Our teams have done a great job of managing through what continues to be an uncertain operating environment. We view the current chain constraints to be temporary in nature, and expect to achieve continued growth in fiscal 2021 supported by our October 31st backlog of $8.92 billion," said Bob Martin, President and CEO of THOR Industries.
"We believe the long-term growth potential for the RV industry remains very positive. While it is certainly true that the impact of COVID-19 has brought new buyers into our industry, both THOR, specifically, and the industry, generally, were attracting new buyers and saw strong demand independent of the pandemic. People have shown that they appreciate the long-term value proposition RVs offer – affordability, a vacation in a controlled environment, freedom, and outdoor fun. We also believe that the desire by consumers to 'control their own destiny' and have safer, socially distanced vacation activities has been a key factor in driving recent RV demand and will continue to be a factor for the foreseeable future.
"On December 1, 2020, the RVIA updated their most-likely forecast and now expects an increase of 18.7% in calendar 2021 shipments over their most-likely estimate for calendar 2020 shipments. We support their forecast and believe there is potential for upside to this forecast based on current industry conditions," concluded Martin.
Thor Industries (NYSE: THO) stock price history over the last 5 years
The image below, obtained from Google, shows the stock price history of Thor industries (NYSE: THO) over the last 5 years. And it's been a pretty average time for Thor industries (NYSE: THO) stockholders. 5 years ago the stock was trading at around $57 and its currently trading at $95.68. That's a strong return of 67.8% provided to Thor Industries stockholders over the last 5 years.
Thor industries (NYSE: THO) is also trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Thor industries stock is very positive
Thor industries (NYSE: THO) is also trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Thor industries stock is very positive
Thor Industries (THO) stock vs Winnebago (WGO) over the last 5 years
The image below shows the stock price performance of Thor Industries (THO) and Winnebago (WGO) over the last 5 years. While both are active in the RV sales sector and their stock price trends are similar, the stock price returns are very different. The summary below shows the stock price returns provided by both these firms over the last 5 years
- Winnebago: 197.90%
- Thor Industries: 67.8%
Recent coverage of Thor Industries
The extract below covers the latest regarding Thor Industries as obtained from Finance.yahoo.com
Thor Industries (THO) came out with quarterly earnings of $2.05 per share, beating the Zacks Consensus Estimate of $1.46 per share. This compares to earnings of $1.50 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 40.41%. A quarter ago, it was expected that this recreational vehicle maker would post earnings of $1.38 per share when it actually produced earnings of $2.14, delivering a surprise of 55.07%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. Thor Industries, which belongs to the Zacks Building Products - Mobile Homes and RV Builders industry, posted revenues of $2.54 billion for the quarter ended October 2020, surpassing the Zacks Consensus Estimate by 6.64%. This compares to year-ago revenues of $2.16 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Thor Industries shares have added about 32.6% since the beginning of the year versus the S&P 500's gain of 14.3%.
What's Next for Thor Industries?
While Thor Industries has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Read the full article here
Thor Industries (THO) came out with quarterly earnings of $2.05 per share, beating the Zacks Consensus Estimate of $1.46 per share. This compares to earnings of $1.50 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 40.41%. A quarter ago, it was expected that this recreational vehicle maker would post earnings of $1.38 per share when it actually produced earnings of $2.14, delivering a surprise of 55.07%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times. Thor Industries, which belongs to the Zacks Building Products - Mobile Homes and RV Builders industry, posted revenues of $2.54 billion for the quarter ended October 2020, surpassing the Zacks Consensus Estimate by 6.64%. This compares to year-ago revenues of $2.16 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Thor Industries shares have added about 32.6% since the beginning of the year versus the S&P 500's gain of 14.3%.
What's Next for Thor Industries?
While Thor Industries has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
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 $78.20 a stock (up from our 4th quarter 2020 valuation of Thor Industries).
We therefore believe that Thor Industries stock is overvalued at its current price of $95.68 and we would not recommend long term fundamental or value investors buy into the stock of Thor Industries at its current price of $95.68
We usually recommend that long term fundamental or value investors look to enter the stock at least 10% below our target price (full value price), which in this case is $95.68 in this case.
A good entry into the stock of Thor Industries (THO) would therefore be at $70.40 or below.
We expect that stock of Thor Industries to pull back strongly from current levels to levels closer to our target price (full value price) in coming weeks and months. As the stock of Thor Industries is trading at well above our suggested entry point we rate the stock of Thor as a sell
We therefore believe that Thor Industries stock is overvalued at its current price of $95.68 and we would not recommend long term fundamental or value investors buy into the stock of Thor Industries at its current price of $95.68
We usually recommend that long term fundamental or value investors look to enter the stock at least 10% below our target price (full value price), which in this case is $95.68 in this case.
A good entry into the stock of Thor Industries (THO) would therefore be at $70.40 or below.
We expect that stock of Thor Industries to pull back strongly from current levels to levels closer to our target price (full value price) in coming weeks and months. As the stock of Thor Industries is trading at well above our suggested entry point we rate the stock of Thor as a sell
Next earnings release of Thor Industries
It is expected that Thor Industries will release their 2nd quarter 2021 earnings report in early March 2021