In terms of specifics, I recommended selling the January 2021 puts with a strike of $60 for $2.95. Later on, I recommended selling the September 2021 puts with a strike of $80 for $3.40. I was never exercised on these, but would introduction to momentum trading have been glad if I were, so I consider it a successful outcome. Using the Free Cash Flow to the Firm I calculated in the previous step, I can use the Discounted Cash Flow model to find the intrinsic value of the company.
- In my opinion, consistent profitable growth coming heavily from acquisitions is rare.
- The company issued revenue guidance of $10.50 billion-$11.00 billion, compared to the consensus revenue estimate of $10.81 billion.
- Moreover, high inflation and the rising production costs for new vehicles, in my view, could depress margins and make it impossible to pass all cost increases on to the end customers.
- This is why I look at stocks as things apart from the underlying business.
- One of the things that’ll impact the future of a given stock is the sustainability of its dividend.
- The company is scheduled to release its next quarterly earnings announcement on Wednesday, December 6th 2023.
The stock is a proxy for that business, and its price changes are governed by changes in the mood of the crowd. This is why I look at stocks as things apart from the underlying business. At the risk of boring you even more than usual, I’ll stop trying to make this point theoretically and will use Thor stock itself to demonstrate. using inside bar forex trading strategy Since the company just released earnings, I’ll need to review what happened to the stock during the quarter before last. Had an investor bought the next day, they’d be down by about 13.8% since. Had the investor waited approximately three months (i.e. just before the latest release), they’d be up about 7%.
However, it also makes the company’s operations vulnerable to its suppliers. However, I think only a few manufacturers can benefit from the scale advantage that THOR possess. The biggest competitor within the North American towable and motorized segments is Forest River, owned by Berkshire Hathaway, with a 28.7% market share. Market cap, also known as market capitalization, is the total market value of a company. It’s calculated by multiplying the current market price by the total number of shares outstanding. THOR Industries declared that its board has initiated a share repurchase program on Tuesday, December 21st 2021, which allows the company to repurchase $250,000,000.00 in outstanding shares, according to EventVestor.
Company says inflation and rising interest rates are weighing on RV sales. Go farther and stay longer with improved power capacity and off-grid capability JACKSON CENTER, Ohio , Sept. 14, 2023 /PRNewswire/ — Airstream , the manufacturer of the world’s most iconic travel tr… The app will now be available in the dashboard when using CarPlay, allowing drivers with select Airstream models to easily monitor important travel trailer functions while towing.
Airstream Introduces All-New Interstate® 19X Touring Coach
To calculate the fair value of THOR Industries, I go through a multi-step process. Firstly, I analyze the past to understand the past capital allocation strategy of the company, what Return on Invested Capital (ROIC) the company achieved, and how much it reinvested to grow. In the 2022 Investor Presentation, THOR Industries’ management pointed out that they are not planning to pursue any new acquisitions in the next 3 years.
- The competitive position in the RV industry is determined by factors such as price, design, quality, and service.
- Since the company just released earnings, I’ll need to review what happened to the stock during the quarter before last.
- Additionally, they’ve generated an average of $525 million in cash from operations over the past three years, while spending about $792 million on CFI activities.
- This is the ubiquitous “thesis statement” paragraph that I insert into each article as a way to help insulate people from the “Doyle mojo.” It’s here where you get the “gist” while being insulated from most of the tedium.
This metric is the most important number in analyzing the company because it shows how well the company is investing its capital. If this number were lower than the cost of financing (WACC) it would mean that the company is destroying value and is not worth investing in. To opt-in for investor email alerts, please enter your email address in the field below and select at least one alert option. After submitting your request, you will receive an activation email to the requested email address. You must click the activation link in order to complete your subscription.
In my opinion, the dependability on suppliers combined with seasonality in the demand for new recreational vehicles could severely disrupt the company’s short-term operations. Unpredictability is an important risk for investors that they need to consider before making an investment decision. I’ll conclude this rather long, meandering discussion of risks by looking again at the specifics of the trade I’m recommending.
THOR Industries Beats Profit and Sales Forecasts, and Shares Rise
In 2022, the company acquired Airxcel for $745 million, an industry-leading provider of vehicle heating, cooling, cooking, window coverings, and sidewall products. Similarly, in 2021, THOR acquired Tiffin Motorhomes for $288 million, which expanded the company’s presence in the luxury RV market. Both acquisitions were part of a long-term, strategic growth plan aimed at providing numerous benefits, including strengthening the RV supply chain and diversifying revenue sources. THOR is the sole owner of operating companies which, combined, represent the world’s largest manufacturer of recreational vehicles.
Improvements in cost structures, assembly lines and operational improvements from past acquisitions will drive margins higher during the next business cycle. The lower reinvestment rate (lack of acquisition spending) will positively affect the free cash flow generation in the near future. The acquisitions were financed by internally generated cash flow and debt. The company’s current financial leverage ratio, calculated as Total Long-Term Debt/TTM EBITDA, is around 1.3x, with $1.78 billion in long-term debt outstanding.
Time to Upgrade!
The dividend is payable on Nov. 10 to shareholders of record on Nov. 1. In my view, this perspective is relevant and important for people to grasp. I’ve poked fun at the “we’re not buying stocks we’re buying businesses” perspective frequently recently, but I’ll admit that there’s a very deep truth to it. If you paid $1,000,000 for a private business that spins off $200,000, you wouldn’t abandon it simply because it hit an inevitable soft patch and only produced $100,000 of profits until the inevitable uptick in business.
You may have gotten a sense of my writing style already, dear readers, and you’d be forgiven for not preferring it. If you’re in the category of people who want to read what I think, but don’t want to deal with tiresome, self aggrandizing screeds of a 55-year old man-baby, then this paragraph is for you. This is the ubiquitous “thesis statement” paragraph that I insert into each article as a way to help insulate people from the “Doyle mojo.” It’s here where you get the “gist” while being insulated from most of the tedium. The company has performed well, and I think the dividend is reasonably well covered for the foreseeable future.
Lightning Strikes For Thor Industries, Again
Based on my analysis the shares trade at only 58% of their intrinsic value. This would mean that THOR’s market share would grow from 20.6% to 27% when the Global RV Market is expected to reach around $77 billion in Sales by 2030. Using the guidance for FY2023 CAPEX and average Sales/Capital ratio of 3.50 for the next years, I estimate Required Reinvestment needed for providing such growth in Revenue.
The 50-day moving average is a frequently used data point by active investors and traders to understand the trend of a stock. It’s calculated by averaging the closing stock price over the previous 50 trading days. 8 Wall Street equities research analysts have issued “buy,” “hold,” and “sell” ratings for THOR Industries in the last year. saxo bank: an overview of the firm There are currently 7 hold ratings and 1 buy rating for the stock. The consensus among Wall Street equities research analysts is that investors should “hold” THO shares. A hold rating indicates that analysts believe investors should maintain any existing positions they have in THO, but not buy additional shares or sell existing shares.
This also lines up with a dividend yield of just under 3% which I also consider to be quite decent. It seems that at the moment, investors are paying less, and getting more. Given the above, I’m quite confident buying shares at the current level.
At this point, a dark thought may be festering in your minds, though, dear readers. You may remember something about this global pandemic that we called “Covid”, and how it turned the global economy upside down in 2020. If that’s your perspective, allow me to banish that dark thought from your minds, because the most recent six months were better than the same period in 2019, too. Specifically, revenue was most recently about 88% higher than the most recent pre-Covid period, and net income was about 540% greater. Management has seen fit to reward shareholders by increasing the dividend yet again. According to my valuation, the intrinsic value for THOR Industries is equal to $7.16 billion or $134 per share as of today.
I use the NOPAT calculation to determine the income coming from the core operations of the business that are not affected by the type of financing, such as interest paid on debt. I act as if the company had to pay taxes on this operating income, resulting in NOPAT for each year. Secondly, I calculate the net operating profit after taxes (NOPAT) and capital investments for each year to understand what part of the profit was reinvested into the business to fund growth. After that, I calculate the Capital/Sales Ratio to come up with reasonable estimates about future reinvestment needs. The regular cash dividend is payable on November 10, 2023, to shareholders of record at the close of business on November 1, 2023. THOR Industries declared a quarterly dividend on Tuesday, October 10th.
In my view, we buy the stock, acknowledge that the business cycle is real because we live on Planet Earth, and hold it through ups and downs. I’ve got a reputation in some quarters as being a bit of a trader, but I only ever abandon a stock when I think the crowd is getting excessively optimistic about it. Data are provided ‘as is’ for informational purposes only and are not intended for trading purposes. Data may be intentionally delayed pursuant to supplier requirements. In this analysis of THOR Industries, I begin with Operating Income and calculate the tax rate for each year starting from 2015.0