It Is Time To Buy Some More Thor Industries
If you don’t already have some Thor Industries (NYSE:THO) in your dividend-growth/income portfolio it’s time to start picking some up. The coming is riding a wave of demand that is going to drive revenue and profits for the next two years at least.
"We are pleased to report a solid start to our fiscal year with strong year-over-year growth across all of our major metrics, including net sales, gross margin and net income attributable to THOR. Our backlog continued to increase in the first quarter, setting a record, while dealer inventories continued to decline as many of our product shipments are going directly to fill existing end-customer orders. To address the increase in demand, we have increased production levels. Even with our higher production output and deliveries, demand and backlog for our RV products continue to grow," said Bob Martin, President and CEO of THOR Industries.
Thor Industries Rebound Accelerates
Thor Industries beat on the top and bottom lines in the previous quarter and raised its forward outlook. The company did the same thing this quarter as business accelerates. The company reported $2.54 billion in quarterly revenue which is up 9.5% from the previous quarter, 17.6% from last year, and topped the consensus estimate by 620 basis points. The revenue was driven by strong gains in all categories that are also supported by a wicked increase in backlog.
On a segment basis, North American towables lagged the group with a YOY increase of only 15%. North American Towables did better at 18.75% growth as did the European segment at 22% YOY growth. The strength in sales was leveraged to improve consolidated gross margin by 60 basis points and net income by 122.8%. On the bottom line, GAAP earnings of $2.05 beat the consensus figure by $.56 and these gains are sticky.
Looking forward the company is expecting sustained growth throughout 2021. The company’s backlog increased 194.55% to $8.92 billion, almost a year’s worth of sales at the fiscal Q1 pace. Add in the fact that it will take several months if not quarters to fill the existing pre-orders while inventory at the dealers continues to fall and we could see a sustained increase in revenue well into 2022.
"On December 1, 2020, the RVIA updated their most-likely forecast and now expects an increase of 18.7% in calendar 2021 shipments over their most-likely estimate for calendar 2020 shipments. We support their forecast and believe there is potential for upside to this forecast based on current industry conditions," concluded Martin.
Thor Industries Is A Good, Safe Dividend Payer
Thor Industries is a good, safe dividend payer with a yield in-line with the broad market average. Trading at only 12X earnings it is a value as well. At face value, the company is paying out less than 22% of its earnings and that figure is getting lower. The balance is sheet is a near-fortress with a large cash position, only a modest amount of debt, low leverage, and ample free-cash-flow to support future increases. The company has been increasing for 9 years so there is a precedent. The most recent increase was during the fiscal 1st quarter so it will be several quarters before the next is due.
The Technical Outlook: Thor Industries Is Set Up To Blast Off
Thor Industries’ share price had a little stumble following the FQ1 release but I chalk that one up to the shorts. The short-interest on the stock is about 13% and quite high considering the company’s performance. That said, the stock fell only a few percent and confirmed support at the short-term moving average before the end of the session. Now the stock is edging higher and set up to confirm a strong buy-signal with a move higher. A move above the $100 will not only break resistance and set a new high but it will also trigger bullish crossovers in the stochastic and MACD. There may be some resistance at the $100 and $105 level but I see this stock trading at $120 or higher by early spring 2021
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