Thor Industries (THO) Up 9.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Thor Industries (THO). Shares have added about 9.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Thor Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Thor Q3 Earnings Surpass Estimates, Sales Decline Y/Y
Thor Industries delivered adjusted earnings of $2.24 per share for third-quarter 2023, which surpassed the Zacks Consensus Estimate of $1.13 per share. This outperformance can be primarily attributed to higher-than-expected revenues from the European RVs segments.
The bottom line declined massively by 64.6% from the year-ago profit of $6.32 per share. The company registered revenues of $2,928.8 million for the quarter under review, outpacing the Zacks Consensus Estimate of $2,838 million. However, the top line declined 37.1% year over year.
Segmental Results
North American Towable RVs: Revenues from the segment came in at $1,124 million, down 57.4% year over year due to a decrease in unit shipments resulting from soft dealer and consumer demand. The top line also missed the Zacks Consensus Estimate of $1,354 million.
Gross profit totaled $144 million, declining 68.3% year over year. The pretax income totaled $77.6 million, down from $326.7 million recorded in the year-ago period amid lower gross profit margins. The unit’s total backlog was $757 million at quarter-end, down sharply from $6.9 billion as of Apr 30, 2022.
North American Motorized RVs: Revenues from the segment totaled $795.9 million, which fell 24.4% year over year, owing to a decrease in unit shipments and net price per unit. The top line also lagged the consensus mark of $831 million. Gross profit totaled $93.3 million, dwindling 46.3% year over year. Consequently, pretax profit came in at $48.2 million, declining 58.6% from the year-ago period. The segment’s backlog was $1.26 billion, down from $4.1 billion as of Apr 30, 2022.
European RVs: Revenues from the segment came in at $866.8 million, up 19.7% from the year-ago period. The top line also outpaced the consensus mark of $637 million. Gross profit of $151.8 million, rising 52% year over year. The segment reported a pretax income of $72.4 million, higher than the year-ago level of $20.6 million. The backlog of the segment was $3,474 million, reflecting a rise from $2,878 million recorded on Apr 30, 2022.
Financials
As of Apr 30, 2023, Thor had cash and cash equivalents of $353.2 million and long-term debt of $1,641 million. During the third quarter of 2023, THO repurchased $16.6 million of common stock.
Revised Guidance for 2023
Thor revised its full-year guidance for fiscal 2023. Thor now projects its full year consolidated net sales in the range of $10.5-$11.0 billion, down from the prior guided range of $10.5-$11.5 billion. The consolidated gross profit margin is now expected to be in the range of 13.8-14.2%, up from the previously guided range of 13.4-14.2%. Diluted earnings per share are now expected to be in the range of $5.80-$6.50, up from the previously projected range of $5.50-$6.50.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -37.79% due to these changes.
VGM Scores
Currently, Thor Industries has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Thor Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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