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Why Is Thor Industries (THO) Up 15.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Thor Industries (THO - Free Report) . Shares have added about 15.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Thor Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Thor Beats Q4 Earnings Estimates

Thor delivered a comprehensive beat for fourth-quarter fiscal 2022 (ended Jul 31, 2022). The recreational vehicle (RV) maker posted adjusted earnings of $5.15 per share, which comfortably surpassed the Zacks Consensus Estimate of $4.13. This outperformance can be largely attributed to higher-than-anticipated revenues and gross profits from North American Motorized RVs segment. This marked the 10th straight earnings beat for Thor. The bottom line soared 25% from the year-ago profit of $4.12 per share. The company registered revenues of $3,821.7 million for the quarter under review, topping the Zacks Consensus Estimate of $3,792 million. The top line also increased 6.4% year over year.

Segmental Results

North American Towable RVsRevenues from the segment came in at $1,795.9 million, up 3.8% year over year on the back of robust shipments and benefits from the Tiffin Group buyout. The top line, however, missed the Zacks Consensus Estimate of $1,806 million. Gross profit totaled $273 million, falling short of the consensus mark of $300 million. Pretax profit totaled $181.6 million, down from $202.2 million recorded in the year-ago period amid lower gross profit margins.  At quarter-end, the unit’s total backlog was $2.57 billion, declining sharply from $9.3 billion as of Jul 31, 2021.

North American Motorized RVsRevenues from the segment totaled $1,024.7 million, which rose 24.5% year over year, thanks to higher unit sales and the Tiffin Group buyout benefits. The top line also outpaced the consensus mark of $1,005 million. Gross profit totaled $184 million, beating the consensus mark of $129 million. Consequently, pretax profit came in at $127.4 million, more than doubling from $62.3 million recorded in the year-ago period. Backlog in the segment was $3.44 billion, down from $4.01 billion as of Jul 31, 2021.

European RVs: Revenues from the segment came in at $806.7 million, down 16.8% from the year-ago period. The top line also missed the consensus mark of $835 million. Gross profit of $152.5 million declined 0.7% year over year but topped the consensus mark of $129 million. The segment incurred a pretax income of $74.8 million, higher than the year-ago level of $67.8 million. The backlog of the segment was $2.75 billion, reflecting a drop from $3.55 billion recorded on Jul 31, 2021.

Financials

As of Jul 31, 2022, Thor had cash and cash equivalents of $311.7 million and long-term debt of $1,754.2 million. During the fiscal fourth quarter, the company boosted buyback by $450 million, raising the total authorization to approximately $700 million. During fiscal 2022, THO repurchased $165.1 million of common stock.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -9.54% due to these changes.

VGM Scores

Currently, Thor Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Thor Industries has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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