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Wellington Shields Upgrades Thor Industries to a ‘Buy’

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Price movement

Thor Industries (THO) has a market cap of $4.5 billion. It rose 1.0% to close at $86.55 per share on September 28, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 7.6%, 6.2%, and 55.6%, respectively, on the same day.

THO is now trading 7.1% above its 20-day moving average, 10.1% above its 50-day moving average, and 34.4% above its 200-day moving average.

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Related ETFs and peers

The iShares Morningstar Small Core ETF (JKJ) invests 0.62% 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 market cap that falls into Morningstar’s core style categorization. The YTD price movement of JKJ was 12.9% on September 28.

The Vanguard Small-Cap Value ETF (VBR) invests 0.20% 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): $357.0 billion
  • Drew Industries (DW): $2.5 billion

Thor Industries’ rating and performance in fiscal 4Q16

Wellington Shields has upgraded Thor Industries’ rating to “buy” from “gradually accumulate.” Thor Industries reported fiscal 4Q16 net sales of $1.3 billion, a YoY (year-over-year) rise of 18.2%, as compared to net sales of $1.1 billion in fiscal 4Q15.

Sales of towable RVs and motorized RVs rose 19.8% and 35.3% YoY, respectively, in fiscal 4Q16. The company’s gross profit margin and income from continuing operations before income taxes rose 6.8% and 26.7% YoY, respectively, in fiscal 4Q16.

Its net income and EPS (earnings per share) rose to $82.8 million and $1.57, respectively, in fiscal 4Q16 compared to $69.0 million and $1.31, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, THO reported net sales of $4.6 billion, which represents a rise of 15.0% YoY. The company’s gross profit margin rose 13.9% in fiscal 2016. It reported impairment charges of $9.1 million in fiscal 2016.

Its net income and EPS rose to $256.5 million and $4.88, respectively, in fiscal 2016, as compared to $199.4 million and $3.74, respectively, in fiscal 2015.

Thor’s cash and cash equivalents and inventories rose 14.4% and 64.1%, respectively, in fiscal 2016. Its current ratio fell to 1.6x, and its debt-to-equity ratio rose to 0.84x in fiscal 2016, as compared to its current ratio and a debt-to-equity ratio of 2.1x and 0.41x, respectively, in fiscal 2015. The company reported a consolidated RV backlog of $1.2 billion on July 31, 2016, which represents a YoY rise of 109.1%.

Next, we’ll discuss Trinseo (TSE).

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