THOR Industries (THO): Revisiting Valuation After Recent Share Price Momentum and Earnings Recovery Signs

THOR Industries (THO) has quietly outperformed the broader market this year, and with the stock hovering near 101 dollars after a mixed few months, investors are rechecking the long term RV demand story.

See our latest analysis for THOR Industries.

After a choppy few months, the latest 30 day share price return of 2.86 percent and a solid 3 year total shareholder return of 40.33 percent suggest underlying momentum is still intact, even as sentiment resets around cyclical RV demand.

If THOR’s ride has you thinking more broadly about autos, this could be a good moment to explore other auto manufacturers that might fit your watchlist next.

With THOR trading modestly below analyst targets and showing improving earnings growth, investors face a familiar crossroads: is this a reasonably priced entry into a recovering RV cycle, or is the market already anticipating the next leg of growth?

Price to earnings of 19x, is it justified?

On a price to earnings ratio of 19 times earnings and a last close near 101 dollars, THOR screens as modestly valued rather than obviously cheap.

The price to earnings multiple compares what investors pay per share to the company’s annual earnings per share, a common yardstick for mature, profitable manufacturers like THOR. At 19 times, the market is assigning a premium over the SWS fair price to earnings ratio of 17.3 times. This implies investors are paying up somewhat for earnings that have just begun to reaccelerate after several weaker years.

Against peers, that 19 times multiple sits below the US peer average of 24.1 times but slightly above the global auto industry average of 18.1 times, highlighting a nuanced middle ground. The current valuation suggests investors are not chasing the stock at any price. However, if sentiment cools, the price to earnings ratio could drift closer to the 17.3 times level implied by the fair ratio.

Explore the SWS fair ratio for THOR Industries

Result: Price to earnings of 19x (ABOUT RIGHT)

However, investors still face risks from a prolonged consumer spending slowdown or higher financing costs, either of which could stall RV demand and pressure margins.

Find out about the key risks to this THOR Industries narrative.

Another View, what does fair value say?

Our DCF model points to a fair value of about 105.80 dollars per share, around 4 percent above the current 101.47 dollars price. It hints at modest undervaluation and raises the question: is the market still underestimating a normalized RV earnings recovery?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out THOR Industries for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 906 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own THOR Industries Narrative

If your view differs from this, or you would rather dig into the numbers yourself, you can shape a fresh perspective in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding THOR Industries.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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