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Bear of the Day: Thor Industries (THO)

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Thor Industries (THO - Free Report) is a company that manufactures a wide range of recreational vehicles (RVs) at various production facilities throughout Indiana and Ohio. They sell their RVs through independent dealers in the U.S. and Canada.

Shares of THO have experienced a rocky stretch lately, falling more than 55% year-to-date, and mixed results in Thor’s second-quarter earnings report didn’t much help the stock.

Earnings of $1.67 per share missed the Zacks Consensus Estimate and fell roughly 26% from the year-ago period.

Revenues hit $1.87 billion, which did beat our consensus figure but slumped 3.1% year-over-year.

Gross profit decreased 18.9% to $244.4 million, while gross profit margin fell 13%.

Sales of Towable RVs declined 13.2% year-over-year to $1.14 billion, and pre-tax income from the segment decreased 28.3% year-over-year due to elevated dealers’ inventory levels at certain locations, among other factors.

Sales from Motorized RVs dropped 13.2% year-over-year.

“Our fourth quarter results reflect the actions taken during the period to balance dealer inventory levels," said Bob Martin, president and CEO. “We believe our reduced production levels, combined with higher promotional costs and solid retail demand, have improved the position of our dealers' inventories as they enter the new model year and prepare for the upcoming Dealer Open House.

It didn’t take long for analysts to lower their estimates for fiscal 2019, and four have slashed their earnings outlook in the last 60 days; our consensus has fallen $1.12 from $9.26 $8.14. Earnings are expected to decline around 4.8% for this time period.

The consensus estimate has fallen for next fiscal year, too, down $1.68 from $10.45 to $8.77 per share.

THO is now a Zacks Rank #5 (Strong Sell).

Despite expecting “near-term growth challenges” and other headwinds, Thor Industries believes it will continue to benefit from the overall healthy macroeconomic environment, as well as favorable industry trends.

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