Thor Industries - Aggressive Growth

Thor Industries, Inc. (THO) shares surged to pressure the 52-week high after the recent earnings release. The company is atop its industry and is still trading with good valuations.

Company Description

Thor is the largest recreational vehicle maker. Additionally the company makes commercial buses varying in size and ambulances.

Beat the Street

On Sep 28 Thor reported fourth-quarter and fiscal year end results that delighted investors. Quarterly sales were up 51%, to $664 million over the past year. Net income jumped 64% to $40.6 million.

Earnings per share came out to 78 cents, up from 45 cents a year ago and 15 cents ahead of the Zacks Consensus Estimate. On the year, sales were up 50% and net income was about $110 million, 6 times higher than the previous year.

Estimates Back on Track

Over the past 3 months, the Zacks Consensus Estimate had been fluctuating, not a very bullish sign. However, on the earnings news, analysts unanimously raised full-year estimates, lifting the consensus.

The average estimate for fiscal 2011 is up 14 cents over the past month, to $2.47. Next year’s forecasts are averaging $2.86, up 11 cents. Given the $2.04 earned last year, the annual growth rates are expected to be 21% and 16%.

New Acquisition

Part of the estimate increases is attributed to the Sep 17 acquisition of Heartland Recreational Vehicles. The deal was for $100 million in cash and 4.3 million shares of THO.

Valuations & Comparisons

Shares of THO are trading at just 14 times forward estimates and with a PEG ratio of 0.8, each showing a solid value.

Thor’s operating metrics come in well ahead of its peers. The company’s net profit margin is 4.8%, compared to a negative 7.4% industry average. While the industry average a negative 2% ROE, Thor boasts a whopping 17%.

The Chart

Shares of THO were hitting resistance just prior to the earnings news. Fortunately, the results were good enough to put that in the rearview mirror and the stock is now pressuring the 52-week high.