Thor Industries Sees God-Like Gains, But Can It Continue?

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Source: Thinkstock

Source: Thinkstock

Thor Industries Inc. (NYSE:THO)is an interesting and quite profitable company that designs, manufactures, and sells a range of recreational vehicles, and related parts and accessories in the United States and Canada. It operates through two segments, Towable Recreational Vehicles and Motorized Recreational Vehicles.

The company offers travel trailers under the trade names of Airstream International, Classic Limited, Sport, Flying Cloud, Land Yacht, and Eddie Bauer. It also offers Interstate Class B motorhomes. conventional travel trailers and fifth wheels under the trade names of Cruiser, Rushmore, Zinger, Elevation, Sunset Trail, Montana, Springdale, Hornet, Sprinter, Outback, Laredo, Alpine, Bullet, Fuzion, Raptor, Passport, Cougar, Landmark, Bighorn, Sundance, Elk Ridge, Trail Runner, Cyclone, Prowler, and Wilderness. It also manufactures and sells gasoline and diesel Class A and Class C motorhomes under the names of Four Winds, Hurricane, Windsport, Chateau, Daybreak, Challenger, Tuscany, Outlaw, Palazzo, Axis, Vegas, and A.C.E.

This sector has been under pressure since the Great Recession, but the company has found a way to continuously string together successful quarters. The stock has risen 98 percent in two years, but can this momentum continue? An analysis of the company’s recent performance offers evidence to help answer this question.

In its most recent quarter, Thor’s sales from continuing operations for the third-quarter of fiscal 2014 were $1.05 billion, up 13 percent from $929.8 million in the third-quarter last year, as sales of towable and motorized RVs rebounded from the impact of severe winter weather during early calendar 2014. Gross profit margins improved to 13.6 percent in the third-quarter compared to 13.4 percent in the prior year period. Net income from continuing operations for the third-quarter was $55.1 million, up 13 percent from $48.7 million in the prior-year third-quarter. Including the discontinued operations of Thor’s Bus business, net income for the third-quarter was $55.1 million, up 26 percent from $43.8 million in the third-quarter of fiscal 2013. Diluted earnings per share from continuing operations for the third-quarter was $1.03, up 12 percent from $0.92 in the third-quarter last year. Including the discontinued operations of Thor’s Bus business, diluted earnings per share for the third-quarter was $1.03, up 26 percent from $0.82 in the third-quarter of fiscal 2013.

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