Thor Industries’ Shares Leap 8% on Stellar Q4 Beat

Thor Industries (THO) shares jumped almost 8% on September 28 to close at $121.75 after the company delivered blowout fiscal fourth-quarter results. Markedly, robust performances across all segments and regions led to the highest ever annual profits in THOR’s history.

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Shares of the manufacturer of recreational vehicles (RVs) with a current market capitalization of $6.7 billion have gained around 30% over the past year. (See Thor Industries stock charts on TipRanks)

The quarterly beat was driven by accelerated production that somewhat matched rocketing market demand for RV products, despite ongoing supply chain issues, logistical hurdles, and labor constraints.

Quarterly adjusted earnings of $4.12 per share almost doubled year-over-year and massively outperformed analysts’ expectations of $2.93 per share. The company reported earnings of $2.14 per share in the prior-year period.

Additionally, net sales jumped 54.6% year-over-year to $3.59 billion and exceeded consensus estimates of $3.34 billion. The increase in sales reflected a surge in North American towable RVs sales, which increased 46% to $1.7 billion, and impressive growth of 125% in North American motorized RVs sales to $823 million. Furthermore, European RVs sales jumped 31.1% to $969.9 million.

Notably, during Fiscal 2021, the company sold more than 300,000 units, beating the $12 billion mark in annual sales.

Additionally, the consolidated RV backlog was at a record-high of $16.86 billion as of July 31, 2021, implying outstanding growth of 190% year-over-year.

On top of this, the quarterly gross margin jumped 170 bps to 16.6% driven by higher sales and a decline in sales discounts.

Notably, THOR completely repaid the asset-based credit facility borrowings incurred in connection with the Tiffin Group acquisition during the second quarter of Fiscal 2021.

Looking ahead to Fiscal 2022, THOR Industries CEO Bob Martin commented, “Entering our 2022 fiscal year, we continue to operate in an uncertain time. The rise, fall and rise again of reported COVID-19 cases around the world, supply chain shortages which change almost weekly and a very tight labor market across the country, especially in northern Indiana where most of our production facilities are located, all demand that we continue to focus on managing through these challenges to produce and deliver the innovative and high-quality RVs for which we are known.”

Optimistically, Martin further added, “While we expect these factors will continue to present challenges in fiscal 2022, our positive long-term outlook for the RV industry and THOR Industries remains unchanged. We believe the recent RVIA most-likely estimate of approximately 577,200 unit wholesale shipments in calendar 2021 and its forecast of a 4.0% increase in calendar 2022 wholesale shipments over calendar 2021 shipments are reasonable.”

Ahead of the Q4 results, BMO Capital analyst Gerrick Johnson reiterated a Buy rating and a price target of $160 (31.4% upside potential) on the stock.

Johnson is bullish on the long-term prospects of the RV lifestyle and believes that “engagement with the outdoors will remain elevated”.

However, the analyst decreased his forecast for North America shipments from 41% to 33% based on the ongoing supply chain challenges.

Consensus among analysts is a Moderate Buy based on 2 Buys and 1 Sell. The average Thor Industries price target of $141 implies 15.8% upside potential from current levels.