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- The company has performed well, and I think the dividend is reasonably well covered for the foreseeable future.
- To calculate the fair value of THOR Industries, I go through a multi-step process.
- This would mean that THOR’s market share would grow from 20.6% to 27% when the Global RV Market is expected to reach around $77 billion in Sales by 2030.
- Investors are generally more interested in the future, though, for obvious reasons.
- In 2022, the company acquired Airxcel for $745 million, an industry-leading provider of vehicle heating, cooling, cooking, window coverings, and sidewall products.
- I like my sleep far too much to sell puts based only on the income I can generate.
In my view, we buy the stock, acknowledge that the business cycle is real because we live on Planet Earth, and hold it through ups and downs. I’ve got a reputation in some quarters as being a bit of a trader, but I only ever abandon a stock when I think the crowd is getting excessively optimistic about it. Data are provided ‘as is’ for informational purposes only and are not intended for trading purposes. Data may be intentionally delayed pursuant to supplier requirements. In this analysis of THOR Industries, I begin with Operating Income and calculate the tax rate for each year starting from 2015.
I use the NOPAT calculation to determine the income coming from the core operations of the business that are not affected by the type of financing, such as interest paid on debt. I act as if the company had to pay taxes on this operating income, resulting in NOPAT for each year. Secondly, I calculate the net operating profit after taxes (NOPAT) and capital investments for each year to understand what part of the profit was reinvested into the business to fund growth. After that, I calculate the Capital/Sales Ratio to come up with reasonable estimates about future reinvestment needs. The regular cash dividend is payable on November 10, 2023, to shareholders of record at the close of business on November 1, 2023. THOR Industries declared a quarterly dividend on Tuesday, October 10th.
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.
The company is scheduled to release its next quarterly earnings announcement on Wednesday, December 6th 2023. According to 7 analysts, the average rating for THO stock is “Hold.” how to choose stocks for intraday trading The 12-month stock price forecast is $92.86, which is an increase of 2.44% from the latest price. In my previous missives on this name, I recommended selling put options.
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In 2022, the company acquired Airxcel for $745 million, an industry-leading provider of vehicle heating, cooling, cooking, window coverings, and sidewall products. Similarly, in 2021, THOR acquired Tiffin Motorhomes for $288 million, which expanded the company’s presence in the luxury RV market. Both acquisitions were part of a long-term, strategic growth plan aimed at providing numerous benefits, including strengthening the RV supply chain and diversifying revenue sources. THOR is the sole owner of operating companies which, combined, represent the world’s largest manufacturer of recreational vehicles.
- Specifically, revenue was up just under 49%, and net income was up over 100% (!) from the year ago period.
- Company says inflation and rising interest rates are weighing on RV sales.
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- As previously mentioned, THOR experiences cyclicality in the demand for its products and is highly dependable on the ability of its suppliers to provide necessary components.
- At this point, a dark thought may be festering in your minds, though, dear readers.
To calculate the fair value of THOR Industries, I go through a multi-step process. Firstly, I analyze the past to understand the past capital allocation strategy of the company, what Return on Invested Capital (ROIC) the company achieved, and how much it reinvested to grow. 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.
The stock is a proxy for that business, and its price changes are governed by changes in the mood of the crowd. This is why I look at stocks as things apart from the underlying business. At the risk of boring you even more than usual, I’ll stop trying to make this point theoretically and will use Thor stock itself to demonstrate. Since the company just released earnings, I’ll need to review what happened to the stock during the quarter before last. Had an investor bought the next day, they’d be down by about 13.8% since. Had the investor waited approximately three months (i.e. just before the latest release), they’d be up about 7%.
Short Interest (09/29/
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.
Based on my analysis the shares trade at only 58% of their intrinsic value. This would mean that THOR’s market share would grow from 20.6% to 27% when the Global RV Market is expected to reach around $77 billion in Sales by 2030. Using the guidance for FY2023 CAPEX and average Sales/Capital ratio of 3.50 for the next years, I estimate Required Reinvestment needed for providing such growth in Revenue.
At this point, a dark thought may be festering in your minds, though, dear readers. You may remember something about this global pandemic that we called “Covid”, and how it turned the global economy upside down in 2020. If that’s your perspective, allow me to banish that dark thought from your minds, because the most recent six months were better than the same period review trade your way to financial freedom in 2019, too. Specifically, revenue was most recently about 88% higher than the most recent pre-Covid period, and net income was about 540% greater. Management has seen fit to reward shareholders by increasing the dividend yet again. According to my valuation, the intrinsic value for THOR Industries is equal to $7.16 billion or $134 per share as of today.
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To calculate Free Cash Flow, I add back Depreciation and Amortization as non-cash expenses and take into account yearly changes in Working Capital. Finally, I subtract Capital Investments made to sustain linear programming with gurobipy in python business operations, market position, and fund growth. I believe, that this decentralized business model has many advantages that allow THOR Industries to generate a high return on invested capital.
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.
Finally, I think the dividend is reasonably well covered for the next few years. For those who are skittish about buying at current prices because of fears of a market correction, I would recommend selling the puts described above or a similar trade. For my part, I’ll be both buying stock and selling puts, and I think investors who do either or both will be glad they did.
THOR Industries Announces Regular Quarterly Dividend
This metric is the most important number in analyzing the company because it shows how well the company is investing its capital. If this number were lower than the cost of financing (WACC) it would mean that the company is destroying value and is not worth investing in. To opt-in for investor email alerts, please enter your email address in the field below and select at least one alert option. After submitting your request, you will receive an activation email to the requested email address. You must click the activation link in order to complete your subscription.
Because I’m downright obsessed with making your lives easier, I want to spend some time writing about the dividend. As previously mentioned, THOR experiences cyclicality in the demand for its products and is highly dependable on the ability of its suppliers to provide necessary components. Moreover, high inflation and the rising production costs for new vehicles, in my view, could depress margins and make it impossible to pass all cost increases on to the end customers. The more attractive spread in the prices for used RVs compared to new ones could make consumers purchase used products instead of the new ones as they would offer a better value proposition for them.