Argus Awaits A Better Entry Point For Thor Industries, Downgrades To Hold

Thor Industries, Inc. THO's status as a leader in the recreational vehicles market, the case for buying the stock has come to an end, according to at least one Wall Street analyst.

The Analyst

Argus' Jim Kelleher downgraded Thor's stock from Buy to Hold.

The Thesis

Thor is the "best-positioned" public company in the RV market and boasts a No. 1 position in the towable RV segment with strength in motorized RVs, Kelleher said in a note. The company also has "significant" competitive advantages over its rivals given its superior scale, product range, size and ability to attract younger buyers by adding new technology into RVs.

The stock appears to have run ahead of itself and looks to be "overvalued" at the $145 to $150 price level, the analyst said. Specifically:

• The price-to-trailing earnings ratio of 18.6 is near the high-end of the stock's five-year historical range of 13.6 to 20.4;
• The stock is trading at 1.0 on a price to sales multiple which is at the high point of its five-year range of 0.6-1.0; and
• At a price/book ratio of 4.6 which matches the high point of its historical range of 2.3 to 4.6.

Bottom line, the analyst would consider reverting back to a Buy rating if the stock drops below $140 per share.

Price Action

Shares of Thor have gain more than 50 percent since the start of 2017.

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