On Friday, CFRA, a well-known financial research firm, updated its outlook on Thor Industries Inc. (NYSE: NYSE:THO), a prominent player in the recreational vehicle (RV) market. Analyst Garrett Nelson raised the price target on the company's stock to $115 from the previous $90, while keeping a Hold rating on the shares.
The adjustment in the price target comes after the company's shares have shown an uptick following its last earnings release and as part of the broader stock market's rise. The new target is based on a projected P/E ratio of 17.0x for the fiscal year ending in July 2026, which is above the historical average for Thor Industries.
The firm's adjusted earnings per share (EPS) estimates remain unchanged at $4.65 for the fiscal year 2025 and $6.75 for the fiscal year 2026. The analyst noted that Thor Industries is positioned at the "highly discretionary" end of the consumer discretionary spectrum, which has been affected by the recent increase in interest rates, impacting RV sales.
Despite these challenges, the analyst suggests that the higher price target reflects expectations for improved RV supply and demand fundamentals in the upcoming quarters. Investors and market watchers will be looking forward to Thor Industries' next earnings release, which is scheduled for the morning of December 4.
In other recent news, THOR Industries announced a 4.2% increase in its regular quarterly cash dividend, raising it from $0.48 to $0.50 per share. This development is part of the company's commitment to delivering shareholder value. THOR Industries has also reported increases in revenue and earnings per share for the fourth quarter of 2024, exceeding expectations.
However, the company's forward-looking guidance for fiscal year 2025 suggests a stable trend, with earnings per share expected to be between $5.00 and $6.00, falling short of analyst projections.
Analyst firms Baird and KeyBanc maintain their Outperform and Sector Weight ratings on THOR Industries, respectively, despite the company's tempered expectations. BMO Capital and DA Davidson continue to uphold their Outperform and Neutral ratings, respectively, while Benchmark has initiated coverage on THOR Industries with a Hold rating.
InvestingPro Insights
To complement CFRA's analysis, InvestingPro data provides additional context for Thor Industries' financial position. The company's P/E ratio stands at 22.52, slightly above the projected P/E of 17.0x mentioned in the CFRA report. This could indicate that the stock is currently trading at a premium compared to future earnings expectations.
InvestingPro Tips highlight that Thor Industries has maintained dividend payments for 38 consecutive years and has raised its dividend for 9 consecutive years. This consistent dividend history may appeal to income-focused investors, especially given the current dividend yield of 1.81%. However, it's worth noting that the company suffers from weak gross profit margins, which is reflected in the latest gross profit margin of 14.46%.
The company's revenue for the last twelve months was $10.04 billion, with a revenue growth of -9.69% over the same period. This aligns with the analyst's observation about the challenges in the RV market due to rising interest rates. Despite these headwinds, InvestingPro Tips indicate that analysts predict the company will be profitable this year, which could support the more optimistic price target set by CFRA.
For investors seeking a deeper understanding of Thor Industries' financial health and market position, InvestingPro offers 8 additional tips, providing a more comprehensive analysis to inform investment decisions.
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