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Bull of the Day: Thor Industries (THO)

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Founded in 1980, Thor Industries (THOis one of the world’s largest manufacturers of recreational vehicles (RVs). They operate under two major business segments: 1) Towable RVs including travel trailers, fifth wheels and specialty trailers, and 2) Motorized RVs including  bus style and van motorhomes.

They have 197 operating facilities in the US and sell their products through independent retail distributors primarily in the U.S. and Canada.

Impressive Third Quarter Results

The company reported earnings of $78.7 million, or $1.49 a share, up from $50.5 million, or 96 cents, in the same quarter last year. Sales increased 66% to $1.7 billion. Results were boosted by the recent acquisition of Jayco.

“The strong revenue and earnings growth reflects the ongoing enthusiastic reception of our product offerings by dealers and consumers alike, as well as our ability to effectively manage our growth and integrate acquisitions successfully," said the CEO.

The company has an impressive record of profitability. They have been profitable every year since their founding in 1980, so that’s 36 consecutive years of profitability in different business cycles.

They have grown their earnings consistently, with a 5-year CAGR of 23% for net income and 24% for diluted EPS.  

Rising Earnings Estimates

Analysts have raised their estimates for the company after excellent earnings. The Zacks Consensus Estimate for the current and the next fiscal year have increased to $6.38 and $6.89 per share from $5.81 and $6.46, 60 days ago.

THOR INDS INC Price, Consensus and EPS Surprise

The management expects double-digit growth in revenues and improvements in earnings throughout fiscal 2017.

Positive Industry Outlook

Baby boomers, representing about 24% of the population are their target market and as they approach retirement age, they will have more time and travel and camping. Of late, the company has also focused on lower priced products with more technological innovations to attract Generation X and Millennials.

The Bottom Line

The stock has a VGM score of “B”. Further Zacks Industry rank of 4 out of 265 (top 2%) greatly increases the likelihood of short-to-mid- term outperformance.

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