We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Thor Industries, Inc. (THO - Free Report) is getting pressured by both a tight labor market and the steel and aluminum tariffs. This Zacks Rank #5 (Strong Sell) has seen the air come out of its stock's sails despite another quarter of record sales.
Thor is the world's largest manufacturer of recreational vehicles, also known as "RVs". It's brands include Airstream, Bison, Dutchman, and Jayco. It sells both towables and motorized homes.
Missed on Earnings in the Fiscal Third Quarter
On June 6, Thor reported its fiscal third quarter results and missed on the Zacks Consensus Estimate by 12 cents. It reported $2.53 versus the consensus of $2.65.
It was the first miss for the company in five quarters.
However, it was a record third quarter with net sales up 11.7% to $2.25 billion as both Baby Boomers and Millennials take to the open road in record numbers.
Sales rose 12.8% for the Towable segment, that includes the popular Airstream, and gained 8.8% for the Motorized segment.
Gross profit, however, fell to 14.1% from 14.6% a year ago, due to costs associated with warranty expenses and slightly higher labor and material costs.
The unemployment rate in Elkhart, Indiana, where Thor's main manufacturing plants and headquarters are located, has remained near historic low levels. But even with those pressures, Thor said that its labor pressures had moderated in the quarter.
It's facing "headwinds" due to the steel and aluminum tariffs as well as higher warranty costs.
Analysts Cut Estimates
While the RV industry remains strong, as does the backlog and orders, the analysts cut fiscal 2018 and 2019 estimates anyway due to the commodity cost pressures and uncertainties.
The fiscal 2018 Zacks Consensus Estimate fell to $8.77 from $9.16 over the last 60 days. That's still a gain of 23% over the fiscal 2017 earnings of $7.09.
Analysts also cut fiscal 2019 estimates. That pushed the Zacks Consensus down to $9.42 from $10.88 just 2 months ago. But that's still another 7.4% gain.
The analysts aren't saying the earnings growth cycle has peaked. Their estimates indicate that the gains are simply slowing.
Is it Cheap Here?
Investors have fled the RV stocks, including Thor in 2018.
Shares have fallen 37% year-to-date, and are now down sharply from the early 2018 highs.
Could Thor be a buying opportunity at these levels? After all, the year-over-year earnings growth is still there.
Thor now trades with a forward P/E of just 11.4. That's cheap compared to the S&P 500 which trades around 18x.
It also pays a dividend, now yielding 1.5%.
But until the trade and tariff impacts become known, investors will likely stay away from this entire industry.
Competitor Winnebago Industries (WGO - Free Report) has fallen 24% year-to-date and now trades with a forward P/E of just 13.3. It's a Zacks Rank #3 (Hold).
Parts maker LCI Industries (LCII - Free Report) has fallen 28% year-to-date. It has a forward P/E of 13. It's a Zacks Rank #4 (Sell).
For investors looking for a buying opportunity in the RV industry, you might need to have a little more patience.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Bear of the Day: Thor Industries (THO)
Thor Industries, Inc. (THO - Free Report) is getting pressured by both a tight labor market and the steel and aluminum tariffs. This Zacks Rank #5 (Strong Sell) has seen the air come out of its stock's sails despite another quarter of record sales.
Thor is the world's largest manufacturer of recreational vehicles, also known as "RVs". It's brands include Airstream, Bison, Dutchman, and Jayco. It sells both towables and motorized homes.
Missed on Earnings in the Fiscal Third Quarter
On June 6, Thor reported its fiscal third quarter results and missed on the Zacks Consensus Estimate by 12 cents. It reported $2.53 versus the consensus of $2.65.
It was the first miss for the company in five quarters.
However, it was a record third quarter with net sales up 11.7% to $2.25 billion as both Baby Boomers and Millennials take to the open road in record numbers.
Sales rose 12.8% for the Towable segment, that includes the popular Airstream, and gained 8.8% for the Motorized segment.
Gross profit, however, fell to 14.1% from 14.6% a year ago, due to costs associated with warranty expenses and slightly higher labor and material costs.
The unemployment rate in Elkhart, Indiana, where Thor's main manufacturing plants and headquarters are located, has remained near historic low levels. But even with those pressures, Thor said that its labor pressures had moderated in the quarter.
It's facing "headwinds" due to the steel and aluminum tariffs as well as higher warranty costs.
Analysts Cut Estimates
While the RV industry remains strong, as does the backlog and orders, the analysts cut fiscal 2018 and 2019 estimates anyway due to the commodity cost pressures and uncertainties.
The fiscal 2018 Zacks Consensus Estimate fell to $8.77 from $9.16 over the last 60 days. That's still a gain of 23% over the fiscal 2017 earnings of $7.09.
Analysts also cut fiscal 2019 estimates. That pushed the Zacks Consensus down to $9.42 from $10.88 just 2 months ago. But that's still another 7.4% gain.
The analysts aren't saying the earnings growth cycle has peaked. Their estimates indicate that the gains are simply slowing.
Is it Cheap Here?
Investors have fled the RV stocks, including Thor in 2018.
Shares have fallen 37% year-to-date, and are now down sharply from the early 2018 highs.
Could Thor be a buying opportunity at these levels? After all, the year-over-year earnings growth is still there.
Thor now trades with a forward P/E of just 11.4. That's cheap compared to the S&P 500 which trades around 18x.
It also pays a dividend, now yielding 1.5%.
But until the trade and tariff impacts become known, investors will likely stay away from this entire industry.
Competitor Winnebago Industries (WGO - Free Report) has fallen 24% year-to-date and now trades with a forward P/E of just 13.3. It's a Zacks Rank #3 (Hold).
Parts maker LCI Industries (LCII - Free Report) has fallen 28% year-to-date. It has a forward P/E of 13. It's a Zacks Rank #4 (Sell).
For investors looking for a buying opportunity in the RV industry, you might need to have a little more patience.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>