I like to try to repeat success when I can, so that is what I’m going to do. In terms of specifics, I want to write the September Thor puts with a strike of $60. If I sell these, and the shares remain above $60 over the next six months, I’ll simply add $2,600 to the $3,175 already earned from selling puts on this name. That will, of course, be a welcome addition to the whiskey acquisition fund. If the shares fall in price, I’ll be obliged to buy, but will do so at a price ~32% below the already cheap level.
- I was never exercised on these, but would have been glad if I were, so I consider it a successful outcome.
- THOR Industries’ business model is focused on flexibility and adaptability to changing market conditions.
- The 50-day moving average is a frequently used data point by active investors and traders to understand the trend of a stock.
- That CFI figure is skewed higher by acquisition costs over the past three years, though.
THOR Industries’ business model is focused on flexibility and adaptability to changing market conditions. The company doesn’t engage in heavy manufacturing that would require higher working capital investments and higher overhead costs but rather focuses on assembly. The Price-to-Earnings (or P/E) ratio is a commonly used tool for valuing a company. It’s calculated by dividing the current share price by the earnings per share (or EPS). It can also be calculated by dividing the company’s Market Cap by the Net Profit. THO, +2.29% late Tuesday said its board has authorized a 7% dividend increase to 48 cents a share.
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THOR Industries, Inc. designs, manufactures, and sells recreational vehicles (RVs), and related parts and accessories in the United States, Canada, and Europe. The company offers travel trailers; gasoline and diesel Class A, Class B, and Class C motorhomes; conventional travel trailers axes forex broker review and fifth wheels; luxury fifth wheels; and motorcaravans, caravans, campervans, and urban vehicles. It also provides aluminum extrusion and specialized component products to RV and other manufacturers. The company provides its products through independent and non-franchise dealers.
It’s not all animated bluebirds and rivers of whiskey at Thor, though. The level of debt has obviously ballooned over the past year, and I think investors need to be compensated for that deterioration in the capital structure. In my view, these are venial sins, though, as I don’t think the debt threatens the dividend here.
The company produces a wide range of recreational vehicles in the United States and Europe, which it sells to independent, non-franchise dealers along with related parts and accessories. Since going public in 1984, THOR Industries has achieved significant growth through a combination of organic growth, strategic acquisitions, and resulting from them efficiency improvements. Investors are generally more interested in the future, though, for obvious reasons. One of the things that’ll impact the future of a given stock is the sustainability of its dividend.
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At the same time, the stock is trading at levels lower than when I became bullish on the name previously. It seems that my bullishness is echoed by insiders who’ve just spent nearly $2.3 million buying shares for themselves. Finally, I’ll be expanding the whiskey acquisition fund with more short put options, and I would recommend this or a similar trade. The competitive position in the RV industry is determined by factors such as price, design, quality, and service. Thanks to THOR’s dominant market position, the quality of its products, warranty coverage, and service allows the company to compete favorably with retail purchasers. While we are not dependent on any one supplier, we do depend on a consistent supply of chassis from a limited number of chassis suppliers.
Speaking of the Dividend
This repurchase authorization allows the company to repurchase up to 4.3% of its shares through open market purchases. Shares repurchase programs are often an indication that the company’s leadership believes its shares are undervalued. In my view, this has many of the characteristics of a growth business. review moneyball For example, from 2013 to 2021, revenue grew at a CAGR of ~16% and net income grew at a CAGR of ~17%. Zooming into the very recent past, the growth story remains very much intact in my view. Specifically, revenue was up just under 49%, and net income was up over 100% (!) from the year ago period.
Rather they want to focus on improving operational efficiency and organic growth. In my opinion, consistent profitable growth coming heavily from acquisitions is rare. The fact, that the Return on Invested Capital (that includes goodwill) is high trading with plus500 and stable over many years shows that THOR is not overpaying for the acquisitions and generates good returns from the assets it acquires. In the 2022 Annual Report, management outlines the negative impact on production caused by chassis shortage.
For more information on the Company and its products, please go to Wade Thompson and Peter Orthwein founded THOR Industries in 1980 with the purchase of Airstream, an already iconic brand. Since going public in 1984, THOR has grown both organically and through strategic acquisitions in both recreational vehicles (RVs) and buses.
Some put writers don’t want to actually buy the stock – they simply want to collect premia. Such investors care more about maximizing their income and will be less discriminating about which stock they sell puts on. I like my sleep far too much to sell puts based only on the income I can generate. I’m so much of a coward that I’m only willing to sell puts on companies I’m willing to buy at prices I’m willing to pay. I wasn’t always so disciplined, but after painful losses, I decided to only ever sell puts on quality companies at prices I was willing to pay.
Today, the THOR Family of Companies is the world’s largest manufacturer of recreational vehicles. THOR Industries is well-positioned to harness many new opportunities to grow in the RV market. The calculated intrinsic value of $134/share suggests that the company is significantly undervalued, thus providing a potential investment opportunity for long-term value investors.
Finally, I use management estimates and information learned from research to estimate future cash flows to calculate the intrinsic value of the company using Discounted Cash Flow Model. Another risk factor is that, one of the dealers, FreedomRoads, in each of the last three years, accounted for more than 10% of the company’s net sales. In 2020, 2021, and 2022 it was responsible for 15%, 13%, and 13% of revenue respectively. Another area of future growth opportunities in the North American aftermarket and service business, where the management sees a $2 billion TAM for its products.
As I will show in my valuation current acquisition strategy requires the company to reinvest more money every year than it generates. This resulted in the growth of long-term debt from zero to $1.78 billion today. THOR Industries, the world’s largest manufacturer of recreational vehicles (RVs), was founded in 1980.
This further negatively impacts our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice. This strategy has propelled THOR Industries to the number-one market position in both North America and Europe. The company’s combined market share in 2022 in the United States and Canada was approximately 41.9% for travel trailers and fifth wheels, and around 49.4% in the motorhomes segment.
I also calculated the Sales/Capital Ratio, which tells me how much capital the company must have invested to generate each year’s revenue. It means that for every $1 of Invested Capital, it generates $3.50 in Sales. This number I am going to use to forecast future capital requirements for funding the growth of the company. I believe, that cyclicality is an inherent feature of this business and given the experience of the management and their profitable history during the down part of the cycle, this is not an issue that disqualifies this investment. I see these problems as an opportunity the market offers to the long-term investor to misprice the stock. One must only incorporate these short-term headwinds into the valuation model accordingly.
I anticipate people arguing that it’s silly to take a bullish perspective at this point because demand will inevitably slow. I understand, and agree with that perspective, but that’s not really the point. The question is “by what amount will demand have to be destroyed for the valuation to be driven to extremes? ” In other words, how much will the “E” in the PE ratio need to deteriorate to bring the relationship between price and value back to a more normal level? I’d still be comfortable holding a company that traded at that valuation.