Back to top

Image: Bigstock

Thor (THO) Cheers Shareholders With 2.5% Dividend Increase

Read MoreHide Full Article

In a bid to increase shareholder value, Thor Industries, Inc. (THO - Free Report) announced a 2.5% hike in quarterly dividend rate to 40 cents per share from the prior figure of 39 cents. This new dividend will be payable on Nov 8, 2019 to its shareholders of record as of Oct 25, 2019.

Previously, the board of directors had approved a 5% dividend raise on Oct 11, 2018. Notably, the board of directors of Thor has been approving dividend hikes for more than a decade now. It paid approximately $84.1 million and $78 million in dividends in fiscal 2019 and 2018, respectively.

Thor pays regular quarterly cash dividends and engages in share buyback programs to return value to its shareholders. In June 2018, Thor’s board authorized the company to buy back $250 million worth of shares over the next two years. Although it didn’t make any purchase under this program till fiscal 2019, the firm intends to repurchase all of the outstanding shares by the end of fiscal 2020, per regulatory guidelines.

Thor has been banking on solid European RV segment and the acquisition of Erwin Hymer Group (“EHG”), which was completed in the beginning of fiscal third-quarter 2019. Also, it has been gaining traction on the back of improving operational efficiency and housing industry fundamentals.

Stock Performance

Over the past year, shares of the company have declined 35.7%, underperforming its industry’s 14.8% fall. The underperformance was mainly due to lackluster earnings performance in the last few quarters. Worryingly, its earnings missed the Zacks Consensus Estimate in five of the trailing six quarters. Moreover, softness in North American Towable RV and Motorized RV, along with higher raw material, labor, freight and warranty costs are pressing concerns.

During fiscal 2019, earnings declined more than three times from the year-ago level of $8.14 due to the above-mentioned headwinds.

Nonetheless, the company has been regaining strength, as is evident from fiscal fourth-quarter results, wherein adjusted earnings surpassed the consensus mark by 14.9% and grew 1.8% on a year-over-year basis. The company has been benefiting from the EHG acquisition.

In fact, Thor is optimistic for fiscal 2020, and believes that it will leverage on continued integration and growth opportunities of EHG. It also remains focused on working capital management, improving net cash by operating activities and reducing net debt level. For fiscal 2020, it expects strong top-line growth on the back of solid EHG contribution.

Meanwhile, the consensus estimate for fiscal 2020 earnings is currently pegged at $5.62 per share, indicating 8.5% year-over-year growth. Notably, it has an impressive VGM Score of A. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2 offer solid investment choices. Overall, it constitutes a great pick in terms of growth and value investment, supported by a Growth and Value Score of A.

Zacks Rank & Stocks to Consider
Thor currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Construction sector are Lennar Corporation (LEN - Free Report) , Taylor Morrison Home Corporation (TMHC - Free Report) and Meritage Homes Corporation (MTH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lennar, Taylor Morrison and Meritage Homes’ long-term earnings are expected to grow 9%, 8.5% and 5.4%, respectively.

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>>