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Thor Industries Inc. (NYSE: THO) produces a variety of recreational vehicles (RVs) in the US and distributes those vehicles, along with related parts and accessories, mostly in the US and Canada. North American Towable Recreational Vehicles, North American Motorized Recreational Vehicles, and European Recreational Vehicles are the three reportable segments through which the company does business.
THO Details
Recent Developments
Key Takeaways from third quarter FY23 financial results
Balance Sheet & Liquidity Position
Key Risks
Outlook
The company anticipates the calendar year 2022 North American RV industry retail sales of between 460,000 and 480,000 units, which would represent one of the best years of North American RV retail sales on record, barring additional macroeconomic impacts. The company believes retail demand for the remainder of the fiscal year 2022 and the start of the fiscal year 2023 will be strong. Furthermore, the company will share its long-term vision, priorities, and financial targets at its investor day on June 27, 2022.
Top shareholders
The top 10 shareholders together form around 57.56% of the total shareholding, while the top 4 constitute the maximum holding. Kayne Anderson Rudnick Investment Management LLC and Vanguard Group Inc. hold the maximum stake in the company at 10.30% and 9.74%, respectively, as also highlighted in the chart below:
Source: REFINITIV, Analysis by Kalkine Group
Valuation Methodology: EV/Sales Multiple-Based Relative Valuation
Source: REFINITIV, Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation
Over the past six months, THO’s share price has corrected by 23.47%. The stock is currently leaning towards the lower end of its 52-week range of USD 66.26 to USD 128.87. The current price as can be seen in the graph is below both short-term (40-day) SMA and long-term (200-day) SMA, with an RSI of 51.07. The likelihood of the beginning of a bullish cycle for the stock is high because the price has made higher lows and has strong RSI momentum. We have valued the stock using the EV/Sales multiple-based relative valuation method and arrived at a target price of USD 93.92. We believe that the company is trading at a discount from its peer's average regardless of strong fundamentals, and competitive advantages in profitability margins of the company which give bullish estimates for the upcoming near future.
Considering the strong fundamentals, robust top-line results, positive outlook, technical analysis, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the closing price of USD 75.50 as of June 22, 2022.
1-Year Technical Chart, as of June 22, 2022. Data Source: REFINITIV, Analysis by Kalkine Group
Technical Analysis Summary:
*Entry Price as of June 22, 2022.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
Note 3: The report publishing date is as per the Pacific Time Zone.
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