Rating Change #9
Thor Industries (THO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- THOR INDUSTRIES INC has improved earnings per share by 9.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, THOR INDUSTRIES INC increased its bottom line by earning $2.08 versus $0.31 in the prior year. For the next year, the market is expecting a contraction of 1.0% in earnings ($2.06 versus $2.08).
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Automobiles industry average, but is less than that of the S&P 500. The net income increased by 17.3% when compared to the same quarter one year prior, going from $34.11 million to $40.01 million.
- THO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
- The revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 25.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
Thor Industries, Inc., together with its subsidiaries, manufactures and sells a range of recreation vehicles and small and mid-size buses, as well as related parts and accessories in the United States and Canada. The company has a P/E ratio of 15.7, equal to the average automotive industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Thor has a market cap of $1.7 billion and is part of the consumer goods sector and automotive industry. Shares are down 11.1% year to date as of the close of trading on Thursday.You can view the full Thor Ratings Report or get investment ideas from our investment research center.