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Northcoast Research Upgrades Thor Industries to a ‘Buy’

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Sep. 14 2016, Published 1:06 p.m. ET

THO’s price movements

Thor Industries (THO) has a market cap of $4.3 billion. It rose 0.06% to close at $77.21 per share on September 13, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -6.6%, -0.92%, and 38.80%, respectively, on the same day.

THO is trading 3.7% below its 20-day moving average, 0.84% above its 50-day moving average, and 22.3% above its 200-day moving average.

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Related ETFs and peers

The iShares Morningstar Small Core (JKJ) invests 0.57% of its holdings in Thor Industries. The ETF tracks a market-cap-weighted index of US small-cap core stocks. The index selects stocks from 90%–97% of the market cap that falls into Morningstar’s core style categorization. The YTD price movement of JKJ was 10.5% on September 13, 2016.

The Vanguard Small-Cap Value ETF (VBR) invests 0.17% of its holdings in Thor Industries. The ETF aims to track the CRSP US Small-Cap Value Index. The index selects from a list of stocks in the 85%–99% range of market cap, based on five value factors.

The market caps of Thor Industries’ competitors are as follows:

  • Berkshire Hathaway (BRK.A): $368.2 billion
  • Drew Industries (DW): $2.4 billion

Thor Industries’ rating

Northcoast Research has upgraded Thor Industries’ rating to a “buy” from “neutral.”

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Thor Industries’ performance in fiscal 3Q16

Thor Industries reported fiscal 3Q16 net sales of $1.3 billion, a rise of 8.3% from $1.2 billion in fiscal 3Q15. In fiscal 3Q16, sales of its towable RVs (recreational vehicles) and motorized RVs rose 1.7% and 20.7%, respectively, compared to fiscal 3Q15.

In fiscal 3Q16, the company’s gross profit margin and income from continuing operations before income taxes rose 10.6% and 22.9%, respectively, compared to fiscal 3Q15.

Its net income and EPS (earnings per share) rose to $78.6 million and $1.49, respectively, in fiscal 3Q16 compared to $62.8 million and $1.17, respectively, in fiscal 3Q15.

In fiscal 3Q16, Thor Industries’ cash and cash equivalents and inventories rose 34.8% and 11.9%, respectively, compared to fiscal 3Q15. Its current ratio and debt-to-equity ratio rose to 2.2x and 0.42x, respectively, compared to 2.1x and 0.41x, respectively, in fiscal 3Q15. In fiscal 3Q16, it reported consolidated RV backlogs of $1.1 billion, a rise of 51.3% compared to fiscal 3Q15.

Next, we’ll look at Berry Plastics Group (BERY).

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