fbpx
QQQ
+ 2.86
344.88
+ 0.82%
DIA
+ 2.25
336.53
+ 0.66%
SPY
+ 2.12
420.48
+ 0.5%
TLT
+ 0.27
143.00
+ 0.19%
GLD
+ 0.40
165.75
+ 0.24%

Thor's 'Solid Quarter' Not Strong Enough For This Analyst To Turn Bullish

by
March 8, 2018 1:44 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More

Thor Industries, Inc. (NYSE:THO), a maker of a range of recreational vehicles, reported Wednesday its fiscal second quarter results which were "solid" but not strong enough for Stifel to turn bullish on the stock.

The Analyst

Stifel's Michael Baudendistel maintains a Hold rating on Thor Industries' stock with a price target boosted from $132 to $142.

The Thesis

Thor Industries reported a slight EPS beat on better-than-expected revenue, Baudendistel said in a note. Encouragingly, the report offered evidence the RV cycle hasn't come to an end given a 34 percent year-over-year rise in backlog coupled with an increase in retail inventories that was in-line with sales growth. In fact, a slightly higher sticker price from rising input costs is unlikely to impact demand.

Thor Industries' management also highlighted two different studies that concluded the average age of an RV buyer has fallen by two to three years, Baudendistel said. This data is consistent with commentary from dealers and implies its addressable market, especially in towables, is expanding.

The most notable aspect of Thor Industries' business is its "very strong" cash flow and the company should be able to use its cash to repay the entire debt associated with its Jayco acquisition, the analyst said. If the company doesn't pursue new M&A deals, it could restart a stock buyback program and it can assume $300 million in repurchases and still building a nearly $500 million cash balance by the end of fiscal 2019.

The analyst recommends investors stay on the sidelines until the company can offer "early evidence of a solid retail sales season."

Price Action

Shares of Thor Industries were trading lower by 4.4 percent Thursday at $116.93.

Related Links:

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

5 Reasons Why BMO Upgraded Winnebago

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to our YouTube channel.


Related Articles

Pullback in 'Financially Disciplined' Thor Industries Creates Entry Point, Argus Says In Upgrade

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

Thor Industries Hammers Expectations With Strong Q1 Beat

How The RV Industry Plays A Role In Helping With Harvey