If EPS Growth Is Important To You, Thor Industries (NYSE:THO) Presents An Opportunity
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Thor Industries (NYSE:THO). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Thor Industries with the means to add long-term value to shareholders.
View our latest analysis for Thor Industries
Thor Industries' Improving Profits
Over the last three years, Thor Industries has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, Thor Industries' EPS grew from US$9.92 to US$19.94, over the previous 12 months. Year on year growth of 101% is certainly a sight to behold. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Thor Industries shareholders can take confidence from the fact that EBIT margins are up from 6.9% to 9.3%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Thor Industries' future profits.
Are Thor Industries Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
It's pleasing to note that insiders spent US$4.2m buying Thor Industries shares, over the last year, without reporting any share sales whatsoever. Knowing this, Thor Industries will have have all eyes on them in anticipation for the what could happen in the near future. We also note that it was the Co-Founder & Chairman Emeritus, Peter Orthwein, who made the biggest single acquisition, paying US$1.0m for shares at about US$103 each.
On top of the insider buying, it's good to see that Thor Industries insiders have a valuable investment in the business. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$201m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.
Should You Add Thor Industries To Your Watchlist?
Thor Industries' earnings per share have been soaring, with growth rates sky high. Just as heartening; insiders both own and are buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Thor Industries deserves timely attention. What about risks? Every company has them, and we've spotted 3 warning signs for Thor Industries (of which 1 is significant!) you should know about.
Keen growth investors love to see insider buying. Thankfully, Thor Industries isn't the only one. You can see a a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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