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Thor Industries (THOR) is a Zacks Rank #5 (Strong Sell) that is the world's largest manufacturer of recreational vehicles (RVs). The company produces a wide variety of RVs in North America and Europe, selling them along with related parts and accessories to independent, non-franchise dealers across the United States, Canada, and Europe.
The stock has taken another leg lower after an earnings report and is challenging 2023 lows. With earnings disappointing and estimates headed lower, investors should be cautious at current levels.
About the Company
Thor was founded in 1980 is headquartered in Elkhart, IN. The company employs over almost 25,000 and has a market cap of $5 billion.
Through its subsidiaries, Thor is the leading RV maker in North America in terms of unit sales and revenue. Its North American operating subsidiaries include Airstream, Thor Motor Coach, Tiffin Motorhomes, DRV, Keystone, Heartland, KZ, and Jayco. Each subsidiary operates independently under the company's decentralized structure, making Thor the top player in travel trailers, fifth wheels, and motorized RVs in North America.
Thor operates under three reportable segments: North American Towable Recreational Vehicles (39.8% of total RV revenues in fiscal 2023), North American Motorized Recreational Vehicles (31.3%), and European Recreational Vehicles (28.9%).
THO holds Zacks Style Scores of “B” in Value, but "F" in Momentum. The stock pays a 2% dividend and hasa Forward PE of 20.
Q3 Earnings
In early June, Thor reported Q3 earnings of $2.13 per share, surpassing the expected $1.89 per share, with revenue of $2.80 billion, also exceeding the forecasted $2.72 billion.
Despite the earnings beat, the company has lowered its financial outlook for the fiscal year due to ongoing economic pressures affecting retail buyers.
The revised guidance for FY24 includes earnings of $4.50-4.75 per share (down from $5.00-5.50) and revenue of $9.8-10.1 billion (down from $10.0-10.5 billion), with a gross margin of 13.75-14.0% (previously 14-14.5%).
Thor Industries also adjusted its North American shipments outlook, reducing the expected range to 315,000-325,000 units from the previous 330,000-340,000 units. The company reported a 15.1% gross profit margin, a 30-basis point increase year-over-year. However, North American Towable RV sales declined to $1.07 billion from $1.12 billion year-over-year, and North American Motorized RV sales dropped to $647 million from $796 million. The European order backlog significantly decreased to $1.94 billion from $3.47 billion year-over-year.
Image Source: Zacks Investment Research
Thor noted that while independent dealers saw increased retail activity during the Spring selling season, conversion to sales remained challenging due to economic pressures and high floor plan interest rates, leading to cautious ordering patterns, and suppressed inventory levels.
With the weak outlook, analysts are lowering estimates.
Earnings Estimates
Over the last 60 days, analysts have lowered numbers for the current quarter from $2.17 to $1.35. This is a drop of 37% that has occurred since the earnings release.
For the next quarter, estimates have fallen to $1.62 from $1.22, or 25%.
Looking longer term, the numbers do not improve. Over the last 60 days, estimates for 2025 have dropped from $7.52 to $6.77, or 10%.
Technical Take
The stock dropped over 10% since the earnings release but has since bounced off the lows around the $88 level. The stock has come back to the 50-day MA at $97, and investors might want to take some profits due to the poor fundamental outlook.
The 200-day MA at $104 would be the next opportunity If the bulls have the ability to take the stock higher. However, the bearish trend still looks to be in place, and a revisit to the $93 area, where the 21-day MA resides, is likely.
THO has always been a volatile name and has traded around the $100 level since 2017. Investors should not expect this to change anytime soon with earnings estimates trending lower.
In Summary
Despite being the world's largest manufacturer of recreational vehicles, Thor faces significant challenges in the current economic environment. The company's recent Q3 earnings report showed a mixed performance, with earnings and revenue surpassing expectations but a lowered financial outlook for the fiscal year. The revised guidance, coupled with declining sales in key segments and a substantial drop in the European order backlog, underscores the difficulties Thor is encountering due to economic pressures on retail buyers and high floor plan interest rates.
Investors should stay away until both the fundamental and technical pictures improve. For those interested in the space, a better option might be Skyline (SKY - Free Report) . The stock is a Zacks Rank #3 (Hold) and has held up well despite industry struggles and a recent EPS miss.
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Bear of the Day: Thor Industries (THOR)
Thor Industries (THOR) is a Zacks Rank #5 (Strong Sell) that is the world's largest manufacturer of recreational vehicles (RVs). The company produces a wide variety of RVs in North America and Europe, selling them along with related parts and accessories to independent, non-franchise dealers across the United States, Canada, and Europe.
The stock has taken another leg lower after an earnings report and is challenging 2023 lows. With earnings disappointing and estimates headed lower, investors should be cautious at current levels.
About the Company
Thor was founded in 1980 is headquartered in Elkhart, IN. The company employs over almost 25,000 and has a market cap of $5 billion.
Through its subsidiaries, Thor is the leading RV maker in North America in terms of unit sales and revenue. Its North American operating subsidiaries include Airstream, Thor Motor Coach, Tiffin Motorhomes, DRV, Keystone, Heartland, KZ, and Jayco. Each subsidiary operates independently under the company's decentralized structure, making Thor the top player in travel trailers, fifth wheels, and motorized RVs in North America.
Thor operates under three reportable segments: North American Towable Recreational Vehicles (39.8% of total RV revenues in fiscal 2023), North American Motorized Recreational Vehicles (31.3%), and European Recreational Vehicles (28.9%).
THO holds Zacks Style Scores of “B” in Value, but "F" in Momentum. The stock pays a 2% dividend and hasa Forward PE of 20.
Q3 Earnings
In early June, Thor reported Q3 earnings of $2.13 per share, surpassing the expected $1.89 per share, with revenue of $2.80 billion, also exceeding the forecasted $2.72 billion.
Despite the earnings beat, the company has lowered its financial outlook for the fiscal year due to ongoing economic pressures affecting retail buyers.
The revised guidance for FY24 includes earnings of $4.50-4.75 per share (down from $5.00-5.50) and revenue of $9.8-10.1 billion (down from $10.0-10.5 billion), with a gross margin of 13.75-14.0% (previously 14-14.5%).
Thor Industries also adjusted its North American shipments outlook, reducing the expected range to 315,000-325,000 units from the previous 330,000-340,000 units. The company reported a 15.1% gross profit margin, a 30-basis point increase year-over-year. However, North American Towable RV sales declined to $1.07 billion from $1.12 billion year-over-year, and North American Motorized RV sales dropped to $647 million from $796 million. The European order backlog significantly decreased to $1.94 billion from $3.47 billion year-over-year.
Image Source: Zacks Investment Research
Thor noted that while independent dealers saw increased retail activity during the Spring selling season, conversion to sales remained challenging due to economic pressures and high floor plan interest rates, leading to cautious ordering patterns, and suppressed inventory levels.
With the weak outlook, analysts are lowering estimates.
Earnings Estimates
Over the last 60 days, analysts have lowered numbers for the current quarter from $2.17 to $1.35. This is a drop of 37% that has occurred since the earnings release.
For the next quarter, estimates have fallen to $1.62 from $1.22, or 25%.
Looking longer term, the numbers do not improve. Over the last 60 days, estimates for 2025 have dropped from $7.52 to $6.77, or 10%.
Technical Take
The stock dropped over 10% since the earnings release but has since bounced off the lows around the $88 level. The stock has come back to the 50-day MA at $97, and investors might want to take some profits due to the poor fundamental outlook.
The 200-day MA at $104 would be the next opportunity If the bulls have the ability to take the stock higher. However, the bearish trend still looks to be in place, and a revisit to the $93 area, where the 21-day MA resides, is likely.
THO has always been a volatile name and has traded around the $100 level since 2017. Investors should not expect this to change anytime soon with earnings estimates trending lower.
In Summary
Despite being the world's largest manufacturer of recreational vehicles, Thor faces significant challenges in the current economic environment. The company's recent Q3 earnings report showed a mixed performance, with earnings and revenue surpassing expectations but a lowered financial outlook for the fiscal year. The revised guidance, coupled with declining sales in key segments and a substantial drop in the European order backlog, underscores the difficulties Thor is encountering due to economic pressures on retail buyers and high floor plan interest rates.
Investors should stay away until both the fundamental and technical pictures improve. For those interested in the space, a better option might be Skyline (SKY - Free Report) . The stock is a Zacks Rank #3 (Hold) and has held up well despite industry struggles and a recent EPS miss.