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Why Thor Industries, Inc. Stock Dropped Today

Steve Symington, The Motley Fool

Shares of Thor Industries Inc. (NYSE: THO) were down 12.8% as of 3:15 p.m. EDT Thursday after the recreational-vehicle specialist announced weaker-than-expected fiscal fourth-quarter 2018 earnings.

More specifically, Thor Industries' quarterly net sales declined 3.1% year over year, to $1.87 billion, which translated to a 26.1% decline in earnings per diluted share, to $1.67. Analysts, on average, were looking for earnings of $2.03 per share on revenue of $1.85 billion.

Husband and wife standing with bicycles near an Airstream RV.

IMAGE SOURCE: GETTY IMAGES

So what

"Our fourth quarter results reflect the actions taken during the period to balance dealer inventory levels," explained Thor CEO Bob Martin. "We believe our reduced production levels, combined with higher promotional costs and solid retail demand, have improved the position of our dealers' inventories as they enter the new model year and prepare for the upcoming Dealer Open House."

Martin added that Thor's bottom line also suffered from a combination of higher labor costs and warranty expenses, as well as inflationary price increases driven by tariffs on certain raw material and commodity-based components.

Now what

Looking ahead, Thor Industries believes it will continue to benefit from today's healthy macroeconomic environment and favorable industry trends. But it also expects "near-term growth challenges" for the first half of fiscal 2019, given difficult year-over-year comparisons, which will then be followed by "more favorable top-line growth rates in the second half of the fiscal year."

In the end, while Thor Industries' long-term story appears intact, it's hard to blame the market for bidding shares down today, given its bottom-line miss and impending growth headwinds.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.