The company provided EPS guidance of $6.25-$7.25 for the period, compared to the consensus estimate of $7.12. The company issued revenue guidance of $10.50 billion-$11.00 billion, compared to the consensus revenue estimate of $10.81 billion. THO, -3.33% rose 1.5% in premarket trading Tuesday, after the recreational vehicle company reported fiscal third-quarter profit that dropped sharply but was well above e… It means that by reinvesting and growing the company is creating value – economic profit. This is a well-run company worth taking a deeper dive into the valuation.
- In the 2022 Annual Report, management outlines the negative impact on production caused by chassis shortage.
- The consensus among Wall Street equities research analysts is that investors should “hold” THO shares.
- In the 2022 Investor Presentation, THOR Industries’ management pointed out that they are not planning to pursue any new acquisitions in the next 3 years.
- Additionally, insiders are “talking with their wallets”, and have spent just under $2.3 million of their own money buying stock over the past three months.
- The company offers travel trailers; gasoline and diesel Class A, Class B, and Class C motorhomes; conventional travel trailers and fifth wheels; luxury fifth wheels; and motorcaravans, caravans, campervans, and urban vehicles.
Today, the THOR Family of Companies is the world’s largest manufacturer of recreational vehicles. THOR Industries is well-positioned to harness many new opportunities to grow in the RV market. trading on forex, best tips and guides for traders The calculated intrinsic value of $134/share suggests that the company is significantly undervalued, thus providing a potential investment opportunity for long-term value investors.
Thor Industries Q3 EPS $2.24 vs. $6.32 a year ago; FactSet EPS consensus $1.07
I anticipate people arguing that it’s silly to take a bullish perspective at this point because demand will inevitably slow. I understand, and agree with that perspective, but that’s not really the point. The question is “by what amount will demand have to be destroyed for the valuation to be driven to extremes? ” In other words, how much will the “E” in the PE ratio need to deteriorate to bring the relationship between price and value back to a more normal level? I’d still be comfortable holding a company that traded at that valuation.
The company produces a wide range of recreational vehicles in the United States and Europe, which it sells to independent, non-franchise dealers along with related parts and accessories. Since going public in 1984, THOR Industries has achieved significant growth through a combination admiral markets forex broker review of organic growth, strategic acquisitions, and resulting from them efficiency improvements. Investors are generally more interested in the future, though, for obvious reasons. One of the things that’ll impact the future of a given stock is the sustainability of its dividend.
THOR Industries Announces Date For Its Fiscal 2023 Second Quarter Earnings Release
Rather they want to focus on improving operational efficiency and organic growth. In my opinion, consistent profitable growth coming heavily from acquisitions is rare. The fact, that the Return on Invested Capital (that includes goodwill) is high and stable over many years shows that THOR is not overpaying for the acquisitions and generates good returns from the assets it acquires. In the 2022 Annual Report, management outlines the negative impact on production caused by chassis shortage.
Thor (THO) to Report Q4 Earnings: Here’s What to Expect
Finally, I use management estimates and information learned from research to estimate future cash flows to calculate the intrinsic value of the company using Discounted Cash Flow Model. Another risk factor is that, one of the dealers, FreedomRoads, in each of the last three years, accounted for more than 10% of the company’s net sales. In 2020, 2021, and 2022 it was responsible for 15%, 13%, and 13% of revenue respectively. Another area of future growth opportunities in the North American aftermarket and service business, where the management sees a $2 billion TAM for its products.
Some put writers don’t want to actually buy the stock – they simply want to collect premia. Such investors care more about maximizing their income and will be less discriminating about which stock they sell puts on. I like my sleep far too much to sell puts based only on the income I can generate. I’m so much of a coward that I’m only willing to sell puts on companies I’m willing to buy at prices I’m willing to pay. I wasn’t always so disciplined, but after painful losses, I decided to only ever sell puts on quality companies at prices I was willing to pay.
Investors of record on Wednesday, November 1st will be paid a dividend of $0.48 per share on Friday, November 10th. This is a positive change from the stock’s previous quarterly dividend of $0.45. I am forecasting the 2023 NOPAT using the management’s guidance, and for the next years, I will use the average historical NOPAT Margin and grow them over time as I expect it to be higher in the future when the company matures.
THOR Announces 7% Increase in Its Regular Quarterly Dividend
I also calculated the Sales/Capital Ratio, which tells me how much capital the company must have invested to generate each year’s revenue. It means that for every $1 of Invested Capital, it generates $3.50 in Sales. This number I am going to use to forecast future capital requirements for funding the growth of the company. I believe, that cyclicality is an inherent feature of this business and given the experience of the management and their profitable history during the down part of the cycle, this is not an issue that disqualifies this investment. I see these problems as an opportunity the market offers to the long-term investor to misprice the stock. One must only incorporate these short-term headwinds into the valuation model accordingly.
At the same time, the stock is trading at levels lower than when I became bullish on the name previously. It seems that my bullishness is echoed by insiders who’ve just spent nearly $2.3 million buying shares for themselves. Finally, I’ll be expanding the whiskey acquisition fund with more short put options, and I would recommend this or a similar trade. The competitive position in the RV industry is determined by factors such as price, design, quality, and service. Thanks to THOR’s dominant market position, the quality of its products, warranty coverage, and service allows the company to compete favorably with retail purchasers. While we are not dependent on any one supplier, we do depend on a consistent supply of chassis from a limited number of chassis suppliers.
THOR Industries, Inc. designs, manufactures, and sells recreational vehicles (RVs), and related parts and accessories in the United States, Canada, and Europe. The company offers travel trailers; gasoline and diesel Class A, Class B, and Class C motorhomes; conventional travel trailers and fifth wheels; luxury fifth wheels; and motorcaravans, caravans, campervans, and urban vehicles. It also provides aluminum extrusion and specialized component products to RV and other manufacturers. The company provides its products through independent and non-franchise dealers.
This further negatively impacts our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice. This strategy has propelled THOR Industries to the number-one market position in both North America and Europe. The company’s combined market share in 2022 in the United States and Canada was approximately 41.9% for travel trailers and fifth wheels, and around 49.4% in the motorhomes segment.
During that quarter, not much changed to warrant a near 21% swing in returns. The investors who bought virtually identical shares more cheaply did better than those who bought the shares at a higher price. I think Thor Industries Inc. is a very compelling investment at current prices. Additionally, if earnings collapsed, the shares would remain reasonably priced in my view. Additionally, insiders are “talking with their wallets”, and have spent just under $2.3 million of their own money buying stock over the past three months.
THOR Industries’ business model is focused on flexibility and adaptability to changing market conditions. The company doesn’t engage in heavy manufacturing that would require higher working capital investments and higher overhead costs but rather focuses on assembly. The Price-to-Earnings (or P/E) ratio is a commonly used tool for valuing a company. It’s calculated by dividing the current share price by the earnings per share (or EPS). It can also be calculated by dividing the company’s Market Cap by the Net Profit. THO, +2.29% late Tuesday said its board has authorized a 7% dividend increase to 48 cents a share.