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Should Value Investors Buy Thor Industries (THO) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Thor Industries (THO - Free Report) . THO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.10. This compares to its industry's average Forward P/E of 14.61. Over the last 12 months, THO's Forward P/E has been as high as 11.68 and as low as 6.69, with a median of 9.28.
Another valuation metric that we should highlight is THO's P/B ratio of 1.71. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.52. Over the past year, THO's P/B has been as high as 1.97 and as low as 1.12, with a median of 1.59.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. THO has a P/S ratio of 0.45. This compares to its industry's average P/S of 1.33.
Finally, investors will want to recognize that THO has a P/CF ratio of 12.45. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. THO's P/CF compares to its industry's average P/CF of 16.73. Within the past 12 months, THO's P/CF has been as high as 14.34 and as low as 6.30, with a median of 10.67.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Thor Industries is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, THO feels like a great value stock at the moment.