The lightning struck so many times by Thor Industries (NYSE: TH) it’s hard to count how many but it happened again. The company is still riding a pandemic-fueled demand wave and outperforming on every metric. The only bad news is that the evidence for peak RV sales is overwhelming, and coincidentally, it comes with plans to start giving year-round guidance. Thor Industries executives say they will begin providing full-year guidance in conjunction with the FQ1 (calendar Q4) report after their distributor open house happening now. What this means is that executives are not giving any guidance until they have an idea of ​​what dealer demand will be in the face of slowing sales.



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The latest data shows a 36% decline in year-over-year VR shipments, with weakness in most categories. The worst part of the report is that demand is expected to slow another 20% in 2023, which will weigh heavily on the bottom line. The bottom line for Thor investors is that the market was already priced in due to slowing demand long ago, and there are some compelling reasons to buy the stock now. These include the low 6.5X earnings multiple, ultra-safe dividend yield of 2.3%, buyback program and Q4 results.

Insiders and Institutions Buy RV, Recreation and Camping Shares

The internal and institutional activity at Thor Industries is telling, and this is true throughout the recreational/recreational vehicle universe. Institutions and insiders are buying Camping World (NYSE: CWH), Winnebago (NYSE: WGO), e LCI Industries (NYSE: LCII), which suggests that the value is compelling. LCI Industries is the only one that stands out because institutional activity is a bit mixed but remains above 99%, so it’s something to keep in mind. Also, all but Camping World have relatively high short interest, which could help fuel or sustain a rally once it starts.

In the case of Thor Industries, five insiders, including four directors and the COO, have been buying over the past year and have collected about 0.1% of the stock. Insiders own about 4.3% of the shares in total, and institutions are even more bullish. The institutional activity is worth about 9.6% of the post-launch market capitalization and has stakes of up to 98.6%. At the sell end of the analyst spectrum, they downgraded the consensus sentiment to a Hold with a price target of about 15% above the $75 level through a series of downgrades and price target reductions. That trend could change now that Q4 results are in, but caution is warranted until there is some indication of demand and/or guidance for F2023.

Thor Industries has Thunderous Quarter

Thor Industries had a fantastic quarter where both demand and margin beat consensus estimates. The company reported $3.82 billion in net sales, a 6.4% gain over last year. This includes an increase in selling prices and is offset by a slight decrease in demand. Revenue is also 320 basis points higher than expected and accompanied by a 90 basis point improvement in margin. Combined top line strength and margin improvement added to share repurchases to drive $5.15 EPS or 25% year-over-year growth, which was 3300 basis points better than expected. The bottom line here is that the dividend is ultra safe with its payout ratio below 5%, and additional buybacks and dividend increases can be expected. The company increased its buyback allocation by $0.45 billion to $0.7 billion, or about 18% of market capitalization.

Technical Outlook: Thor Industries hits rock bottom

Thor Industries has been in an 18-month correction that began in early 2021, when it became apparent that there would be a spike in demand for RVs. That selloff hit several lows along the way, including one in mid-spring 2022. That bottom was confirmed in the wake of Q4 results and could lead to a reversal in price action in the coming quarters. Until then, the stock can move sideways within its new range while paying the 2.3% yield and buying back shares.
Thor Industries pulls a bottom



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