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Category: Stock Market and Thor Industries
Date: 15 May 2020 Stock Price: $69.89 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of Thor Industries the world's largest manufacturer of recreational vehicles (RVs)
As we navigate the challenges created by COVID-19, we have rallied the company around safety, productivity and keeping our customers and the industry moving forward" |
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' 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
- Net sales: $2.003 billion (up from $1.290 billion from the same quarter of the previous year)
- Sales increased by 55.2% over the last 12 months
- Net income $28.673 million (up from -$5.42 million for the same quarter of the previous year)
- Diluted earnings per share: $0.52 (up from -$0.16 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 55.396 million (up from 52.86 million for the same quarter of the previous year)
- Cash and cash equivalents: $245.671 million
- Cash and cash equivalents per share: $4.43
- Cash and cash equivalents makes up 6.3% of Thor Industries' market capital
- Cash and cash equivalents makes up 4.36% of Thor Industries' total assets
- Inventories: $926.914 million
- Inventories makes up 16.3% of Thor Industries' total assets
- Accounts receivable: $776.572 million
- Accounts receivable makes up 16.4% of Thor Industries' total assets
- Stockholders equity in Thor Industries: $2.122 billion
- Stockholders equity per share for Thor Industries: $38.30
- Thor Industries is trading at 1.82 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 3.7. Read more about the S&P500 here.
Thor Industries' management commentary on their 2nd quarter 2020 earnings report
ELKHART, Ind., March 9, 2020 /PRNewswire/ -- Thor Industries, Inc. (NYSE: THO) today announced results for the second quarter of fiscal 2020, which ended January 31, 2020.
"With record second-quarter revenues, improved quarterly gross profit margin year-over-year, a growing order backlog and successful new product introductions in the Class B space, all key indicators for Thor Industries were strong in the second quarter. I am especially pleased to note that consolidated revenues were a new second-quarter record for Thor. EHG also reported strong revenues and, as anticipated, returned to quarterly profitability in line with historical trends. It has been a strong start to the year, and we believe we are very well positioned for growth in North America and Europe as we enter our peak selling and cash flow season," said Bob Martin, President and CEO of Thor Industries.
"With record second-quarter revenues, improved quarterly gross profit margin year-over-year, a growing order backlog and successful new product introductions in the Class B space, all key indicators for Thor Industries were strong in the second quarter. I am especially pleased to note that consolidated revenues were a new second-quarter record for Thor. EHG also reported strong revenues and, as anticipated, returned to quarterly profitability in line with historical trends. It has been a strong start to the year, and we believe we are very well positioned for growth in North America and Europe as we enter our peak selling and cash flow season," said Bob Martin, President and CEO of Thor Industries.
"Our second-quarter financial results for the North American Towable RV segment include impairment charges related to two pending strategic divestitures – the pending sale of a property which was no longer being utilized, and the pending sale of Bison Coach, a manufacturer of horse trailers, which no longer fit within our portfolio of businesses. These pending divestitures, which are expected to be completed prior to July 31, 2020, resulted in non-cash impairment charges totaling $10.1 million, or $0.15 per diluted share," said Colleen Zuhl, Thor's Senior Vice President and Chief Financial Officer.
"We have made principal payments of $155 million on our Term Loan B ("TLB") debt during the first half of our fiscal year, and, subsequent to the close of the second quarter, we made additional principal payments on our TLB of approximately $32 million. Life to date, total payments on our acquisition-related debt total approximately $530 million. We continue to expect to make additional significant principal payments on our remaining acquisition-related debt in the second half of our fiscal year."
Integration Update
Bob Martin commented, "During the second quarter, we took a significant step forward in realizing additional value from the integration of EHG with the announcement of the formation of our new subsidiary, Hymer USA. Over time, this new subsidiary will produce a full lineup of Hymer-branded RVs utilizing European style and design that will be built in facilities incorporating the best of German manufacturing practices, automation and control standards. Initial dealer feedback has been excellent, and we believe there is great market potential in North America for this high-quality, European-inspired RV product line."
Outlook
Bob Martin noted, "The last week or two have seen a sharp increase in the concern and market reaction related to the coronavirus and the effect it may have on individuals and communities impacted by the virus, supply chains – particularly for materials sourced from China or other areas that are facing increased infection rates, and on the domestic and global economies. This is a fast developing situation that we are monitoring on a daily basis. We are hopeful that the virus will be contained very quickly and that its impact on individuals will be minimized. In the meantime, in addition to monitoring the situation, we have put in place various action items, including travel limitations for the safety of our employees, and we are in frequent contact with our key vendors discussing availability of the component parts needed to meet our production schedules. We are also evaluating and arranging alternative supply sources for all critical parts which we deem to have potential supply concerns.
As of today:
Absent the uncertainties related to coronavirus, as we enter the peak selling quarters of our fiscal year in both North America and Europe, we are optimistic about our Company, our products and the global RV marketplace," Bob Martin noted. "Our new Class B products from Thor Motor Coach, the Sequence and Tellaro, broaden our product line in the fast-growing Class B market and have been performing very well at retail. Dealer inventories, which were a concern last year, have largely rationalized and are now building ahead of the peak selling season. We have seen record attendance at several early-season RV consumer shows, in both North America and Europe. Also, Germany, which is Europe's leading RV market, continues to report strong RV industry growth. We have delivered solid results for the first half of the fiscal year and, while we are still forecasting calendar 2020 North American retail sales to be flat to modestly down at this point in the selling season, we are also seeing signs of potential upside for the remainder of our fiscal year."
"We have made principal payments of $155 million on our Term Loan B ("TLB") debt during the first half of our fiscal year, and, subsequent to the close of the second quarter, we made additional principal payments on our TLB of approximately $32 million. Life to date, total payments on our acquisition-related debt total approximately $530 million. We continue to expect to make additional significant principal payments on our remaining acquisition-related debt in the second half of our fiscal year."
Integration Update
Bob Martin commented, "During the second quarter, we took a significant step forward in realizing additional value from the integration of EHG with the announcement of the formation of our new subsidiary, Hymer USA. Over time, this new subsidiary will produce a full lineup of Hymer-branded RVs utilizing European style and design that will be built in facilities incorporating the best of German manufacturing practices, automation and control standards. Initial dealer feedback has been excellent, and we believe there is great market potential in North America for this high-quality, European-inspired RV product line."
Outlook
Bob Martin noted, "The last week or two have seen a sharp increase in the concern and market reaction related to the coronavirus and the effect it may have on individuals and communities impacted by the virus, supply chains – particularly for materials sourced from China or other areas that are facing increased infection rates, and on the domestic and global economies. This is a fast developing situation that we are monitoring on a daily basis. We are hopeful that the virus will be contained very quickly and that its impact on individuals will be minimized. In the meantime, in addition to monitoring the situation, we have put in place various action items, including travel limitations for the safety of our employees, and we are in frequent contact with our key vendors discussing availability of the component parts needed to meet our production schedules. We are also evaluating and arranging alternative supply sources for all critical parts which we deem to have potential supply concerns.
As of today:
- We have not experienced any production shutdowns at any of our facilities in the U.S. or Europe as a result of the coronavirus.
- We are monitoring our raw material availability closely and where needed, establishing alternative sources of supply.
- We have not seen any reduction of dealer orders nor any negative impact on retail sales.
- We do not expect the virus to delay the start-up of our newly announced Hymer USA facility.
Absent the uncertainties related to coronavirus, as we enter the peak selling quarters of our fiscal year in both North America and Europe, we are optimistic about our Company, our products and the global RV marketplace," Bob Martin noted. "Our new Class B products from Thor Motor Coach, the Sequence and Tellaro, broaden our product line in the fast-growing Class B market and have been performing very well at retail. Dealer inventories, which were a concern last year, have largely rationalized and are now building ahead of the peak selling season. We have seen record attendance at several early-season RV consumer shows, in both North America and Europe. Also, Germany, which is Europe's leading RV market, continues to report strong RV industry growth. We have delivered solid results for the first half of the fiscal year and, while we are still forecasting calendar 2020 North American retail sales to be flat to modestly down at this point in the selling season, we are also seeing signs of potential upside for the remainder of our fiscal year."
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 been a pretty average time for Thor industries (NYSE: THO) stockholders. 5 years ago the stock was trading at around $61.30 and its currently trading at $69.90. Thats a return of 14% 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 of $89.45 than it is to its 52 week low of $32.30 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 high of $89.45 than it is to its 52 week low of $32.30 which to us is a clear indication that the short term sentiment and momentum of Thor industries stock is very negative.
Recent Google searches trends for Thor stock price and THO stock price
The graphic below shows recent google search trends for THO stock price and Thor stock price over the last 12 months in the United States as obtained from google trends. And as it shows interest in THO stock price and Thor stock price is very limited.
Recent coverage of Thor Industries
The extract below covers the latest regarding Thor Industries as obtained from Fool.com
Prices of $61 a share, $65, $66, $69, and ... $77! Every day of this week, Thor Industries (NYSE:THO) stock has climbed a little bit higher, before finally zooming ahead 11.5% in Friday trading (as of 12:30 p.m. EDT).
So what
Success, it seems, begets success, and after Thor announced on Monday that it has reopened its North American assembly operations, investors have been rewarding Thor stock day after day in hopes that things will soon get back to "normal" for the Elkhart, Indiana-based RV manufacturer. A trend like that couldn't fail to attract the attention of a publication like Investor's Business Daily, which has trained its readers to look for trends. And so this morning, IBD announced that Thor Industries stock had scored a "relative strength rating upgrade." As the investor resource explains, "When building your watch list, [you should] look for stocks with an 80 or higher RS Rating [and] Thor Industries ... now meets that criteria, with an increase from 77 to 84 Friday."
Read the full article here
Prices of $61 a share, $65, $66, $69, and ... $77! Every day of this week, Thor Industries (NYSE:THO) stock has climbed a little bit higher, before finally zooming ahead 11.5% in Friday trading (as of 12:30 p.m. EDT).
So what
Success, it seems, begets success, and after Thor announced on Monday that it has reopened its North American assembly operations, investors have been rewarding Thor stock day after day in hopes that things will soon get back to "normal" for the Elkhart, Indiana-based RV manufacturer. A trend like that couldn't fail to attract the attention of a publication like Investor's Business Daily, which has trained its readers to look for trends. And so this morning, IBD announced that Thor Industries stock had scored a "relative strength rating upgrade." As the investor resource explains, "When building your watch list, [you should] look for stocks with an 80 or higher RS Rating [and] Thor Industries ... now meets that criteria, with an increase from 77 to 84 Friday."
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 $54.10 a stock (down from our 1st quarter 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 $54.10 in this case. A good entry into the stock of Thor Industries (THO) would therefore be at $48.79 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 $54.10 in this case. A good entry into the stock of Thor Industries (THO) would therefore be at $48.79 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 3rd quarter 2020 earnings report in Mid 2020