Recreational vehicle manufacturer, Thor Industries, posted a unique year-end result when it came to sales figures. Even after reporting record sales in spring and summer, the company’s year-over-year sales declined 21% to $1.8 billion in the first quarter of fiscal 2019, while gross margin slipped roughly 3% to 11.8%. These losses arguably stemmed from Thor’s optimistic promotional discounts that resulted in in its double-digit sales declines. Thor lost 65% of its value in CY 2018, whereas its competitor Winnebago Industries (WGO) lost ~55%.
Even still, the company enters the new calendar year with much hope to attract investors. But how?
In new year, Thor focused on improving its ability to adjust production and meet variable market demands. To enhance its manufacturing capacity, Thor allocated $253 million in capital expenditure over the last two fiscal years. Further, management has also predicted that dealer inventories should normalize by the end of 2018, and wholesale shipments in the industry should soon return to a one-to-one relationship with retail sales.
These factors helped Thor attract valuable investors who are willing to patiently build a position.
Currently trading at a discount of 42% against a peer group comprised of stocks in the S&P 400 MidCap Index, the market value of Thor's stock is approaching the company's book value – according to analysts a timely indication for value investors to build position.
Furthermore, Thor is yet to close its pending acquisition of the German RV manufacturer Erwin Hymer Group, which will add $2.9 billion in annual sales to Thor’s operation that could potentially make Thor world’s largest RV manufacturer. Making matters even better, Thor’s debt-free balance sheet and a sizable order backlog is expected to keep business moving solidly in the future.