Thor Industries, Inc.

THO Details

Thor Industries, Inc. (NYSE: THO) is a recreational vehicle manufacturer based in the United States. The company's three segments are North American towable recreational vehicles, North American motorized recreational vehicles, and European recreational vehicles.

Latest News:

• Dragonfly and Keystone’s Agreement: Dragonfly Energy Corp., an American leader in lithium-ion battery technology, agreed to an exclusive arrangement with Keystone RV Company, a subsidiary of THO, on January 20, 2022. Keystone RV dealers will also be the sole aftermarket distributors for Dragonfly Energy batteries, both as part of SolarFlex packages and stand-alone products.
• Launched two Electric RVs: The company presented its eMobility plan centered on the electrification of the RV industry on January 19, 2022. THO showed off two electric RV concepts: a motorhome and a travel trailer.

Q1FY22 Results:

• Rise in Top Line: The company reported a 56.00% rise in net sales to USD 3.96 billion in Q1FY22 (ended October 31, 2021) from USD 2.54 billion in Q1FY21, attributable to a growth in Recreational vehicles in North America.
• Rise in Bottomline: Net income (attributable to common shareholders) for Q1FY22 increased to USD 242.24 million from USD 113.76 million reported in Q1FY21.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 445.85 million and total debt of USD 1.64 billion.

Source: Quarterly Reports Filling

Key Risks:

• High Competition in RV Industry and Cyclical Risk: The company is vulnerable to the risk of competition, which includes, among other things, pricing, design, value, and product quality. Variations in customer demand, disruptions in supply chain management, and seasonal changes may also impact financials.

Outlook:

• FY22 Guidance: THO increased its wholesale shipment forecast for CY21 to over 602,000 units and more than 613,000 units in CY22, which is expected to grow ~2% in coming year.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

THO Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

THO’s share price has fallen 38.04% in the past nine months and is currently leaning towards the 52-week low of USD 85.12. The stock is currently trading below its 50 and above 200 DMA levels, and its RSI Index is at 28.68, indicating an oversold zone. We have valued the stock using the EV/EBITDA multiple based relative valuation methodology and arrived at a target price of USD 102.91.

Considering the major correction in the stock price, growing business model, strong revenue track record, new partnerships, and current valuation, we recommend a “BUY" rating on the stock at the closing price of USD 87.32 as of January 21, 2022.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending on risk tolerance, investors may consider unwinding their positions in an individual stock once the estimated target price is reached.