Forbes analysts on the business news outlet’s Trefis Team and Great Speculations teams took a look at Thor Industries’ recent fiscal reports this week, exploring what contributed to the RV manufacturer’s 130% gain in stock price since the beginning of 2019. Read below for an excerpt from that report:
The stock price of Thor Industries (NYSE: THO), world’s largest recreational vehicles manufacturer, is up roughly 130% since the beginning of 2019. But how did the company pull off such gains, as its revenues declined 5% in 2019? Well, there is a valid reason, of course. As it turns out, the investors have revised their expectations for future earnings growth from the company, given its acquisition of Erwin Hymer Group, one of the largest RV manufacturers in Europe, and in hopes of improved margins going forward. Our dashboard on Thor’s Revenues And Stock Price Change Mismatch provides the key numbers behind our thinking, and we explain more below.
What Brought About A Change In Multiple Despite Poor Fundamentals?
Thor’s revenue decline of 5% can be attributed to a continued pressure in the North America market, after the recreational vehicles market peaked in 2018. Overall U.S. automobile market also witnessed low-single-digit decline in 2019. However, Thor’s revenue in fiscal 2020 are trending higher, up 5% to $5.8 billion for the 9-month period ending April 2020, primarily due to the impact of the EHG acquisition.
Click here to read the full report from Forbes.