This shows that the company is reinvesting more money than it generates. It also illustrates why the long-term debt grew during this time from zero to $1.75 billion. For example, they plan to improve their THOR’s laminated sidewall line by introducing a uniform process and everfx review increasing automation to deliver best-in-class efficiency and quality while reducing labor costs. Management assesses only a 3-year payback period for investments made in these improvements. THOR Industries updated its FY 2024 earnings guidance on Monday, September, 25th.
Based on my analysis, I believe that THOR Industries is a well-run company that has been able to generate highly profitable growth and reinvest a vast majority of its profits back into the business. The historical ROIC of 19%, strong market position, and the forecasted Free Cash Flows suggest that the company will continue to create value for shareholders in the future. Additionally, the company has achieved a long-term Return on Invested Capital of 18%, indicating an effective capital allocation strategy and ability to find profitable reinvestment opportunities. THOR Industries achieved this by focusing on product quality, vertically integrating newly acquired companies, and negotiating better pricing conditions with their suppliers by building good long-term relationships.
The RV industry has very low barriers to entry, making THOR Industries vulnerable to significant competition from numerous manufacturers who sell products that compete directly with theirs. According to the Recreation Vehicle Industry Association (RVIA), there are approximately 80 RV manufacturers in the United States and Canada, and around 30 across Europe, making it a highly competitive industry. These and other risks and uncertainties are discussed more fully in Item 1A of our Annual Report on Form 10-K for the year ended July 31, 2023. Upgrade to MarketBeat All Access to add more stocks to your watchlist. Click the link below and we’ll send you MarketBeat’s list of the 10 best stocks to own in 2023 and why they should be in your portfolio. MarketRank is calculated as an average of available category scores, with extra weight given to analysis and valuation.
- This further negatively impacts our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice.
- During that quarter, not much changed to warrant a near 21% swing in returns.
- In my previous missives on this name, I recommended selling put options.
- To calculate Free Cash Flow, I add back Depreciation and Amortization as non-cash expenses and take into account yearly changes in Working Capital.
- Over the years THOR has received many honors for its growth and management success and has become one of the most admired and respected companies, not only in the RV industry, but in global business.
It’s not all animated bluebirds and rivers of whiskey at Thor, though. The level of debt has obviously ballooned over the past year, and I think investors need to be compensated for that deterioration in the capital structure. In my view, these are venial sins, though, as I don’t think the debt threatens the dividend here.
Coinbase, Apple stocks falls while GitLab, Thor shares rally, and other stocks on the move
I like to try to repeat success when I can, so that is what I’m going to do. In terms of specifics, I want to write the September Thor puts with a strike of $60. If I sell these, and the shares remain above $60 over the next six months, I’ll simply add $2,600 to the $3,175 already earned from selling puts on this name. That will, of course, be a welcome addition to the whiskey acquisition fund. If the shares fall in price, I’ll be obliged to buy, but will do so at a price ~32% below the already cheap level.
- THOR Industries declared a quarterly dividend on Tuesday, October 10th.
- Finally, I think the dividend is reasonably well covered for the next few years.
- According to my valuation, the intrinsic value for THOR Industries is equal to $7.16 billion or $134 per share as of today.
- This is a positive change from the stock’s previous quarterly dividend of $0.45.
THOR Industries’ stock is owned by many different institutional and retail investors. Insiders that own company stock include Amelia Huntington, Andrew E Graves, J Allen a guide to forex day trading strategies Kosowsky, James L Ziemer, Kenneth D Julian, Peter Busch Orthwein and W Todd Woelfer. THOR Industries’ stock was trading at $75.49 at the beginning of the year.
Research & Ratings Thor Industries Inc.(THO)
Furthermore, THOR Industries demonstrates a balanced capital allocation strategy by returning excess cash to shareholders through dividends, with a 10-year dividend compound annual growth rate (CAGR) of 11.1%. The company’s management has recently approved a new share repurchase program, allowing them to repurchase up to $450 million of company stock by July 31, 2025, indicating their confidence in the company’s prospects. THOR Industries’ experienced and long-term-oriented management team, efficient capital allocation, and consistent profitability suggest a strong foundation for future growth and success.
As I will show in my valuation current acquisition strategy requires the company to reinvest more money every year than it generates. This resulted in the growth of long-term debt from zero to $1.78 billion today. THOR Industries, the world’s largest manufacturer of recreational vehicles (RVs), was founded in 1980.
Thor (THO) Q4 Earnings Beat on European RVs Unit Strength
If Thor shares remain above $60 over the next six months, I’ll simply pocket the premium and move on. If the shares fall in price, I’ll be obliged to buy, but will do so at a price that lines up with a 3% dividend yield, and is significantly cheaper than the already discounted price. I believe the reinvestment rate will have to go down as the company matures and the growth slows. The strategy itself is sustainable and should be part of future capital allocation strategy, but the degree to which it was utilized in the past will have to go down. As the company is getting big, there will not be many sufficiently sizable acquisition targets for them to sustain historical growth. The management’s task now is to find more ways to grow organically and lower the reinvestment needs.
Since then, THO stock has increased by 20.1% and is now trading at $90.65. THO, +2.03% fell after hours Monday after the RV maker forecast full-year profit and sales that missed expectations, adding that it expected subdued consumer demand to c… Over the years THOR has received many honors for its growth and management success and has become one of the most admired and respected companies, canadian forex brokers not only in the RV industry, but in global business. Since 2015, THOR Industries has been growing its revenue at an annual rate of 22.6% and its EBIT at an even higher rate of 26.8%. The company has been reinvesting on average around 120% of its profits. When factoring Acquisition Investments, crucial for THOR to grow, I see that for most of the years, I end up with a negative number.
For more information on the Company and its products, please go to Wade Thompson and Peter Orthwein founded THOR Industries in 1980 with the purchase of Airstream, an already iconic brand. Since going public in 1984, THOR has grown both organically and through strategic acquisitions in both recreational vehicles (RVs) and buses.
Stripping these out, a more “typical” CFI for this business is ~$136 million. All of this suggests to me that the annual dividend payment of ~$90 million is reasonably well covered, to 2025 at least. For that reason, I’d be very happy to buy this stock at the right price. In my opinion, these examples show that in the coming years, the growth is going to be mainly organic.
Airstream Introduces All-New Interstate® 19X Touring Coach
THOR Industries, Inc. was incorporated in 1980 and is based in Elkhart, Indiana. Some of you who follow me regularly know that it’s at this point in the article where I turn into a real downer because I start yammering on about how companies you like can be terrible investments if you overpay for them. The fact is, the business is an organisation that sells stuff, hopefully for a profit.
This repurchase authorization allows the company to repurchase up to 4.3% of its shares through open market purchases. Shares repurchase programs are often an indication that the company’s leadership believes its shares are undervalued. In my view, this has many of the characteristics of a growth business. For example, from 2013 to 2021, revenue grew at a CAGR of ~16% and net income grew at a CAGR of ~17%. Zooming into the very recent past, the growth story remains very much intact in my view. Specifically, revenue was up just under 49%, and net income was up over 100% (!) from the year ago period.
In Europe, THOR Industries holds a combined market share of 21.8% for motorcaravans and campervans, and 18% for caravans. Against these obligations the company has about $305 million in cash and equivalents. Additionally, they’ve generated an average of $525 million in cash from operations over the past three years, while spending about $792 million on CFI activities. That CFI figure is skewed higher by acquisition costs over the past three years, though.