Thor Industries (THO) – Closing Long Position – up 90% vs. S&P up 16%
Thor Industries (THO: $116/share) was featured as a Long Idea on 3/27/19. At the time, Thor Industries received a Very Attractive rating. Our long thesis highlighted the firm’s industry leading profitability, long-term secular demand for RVs, and the stock’s cheap valuation.
This report, along with all of our research, utilizes our superior data to get the truth about earnings, as shown in the Harvard Business School and MIT Sloan paper, “Core Earnings: New Data and Evidence.”
During the 492 day holding period, THO outperformed as a long position, rising 90% compared to a 16% gain for the S&P 500.
Thor’s profitability fell in 2019, as inventory and demand returned to more normal levels after a record 2018, and that trend has continued into the trailing-twelve-month (TTM) period. The firm’s return on invested capital (ROIC) has fallen from 17% at the time of our report to 6% TTM.
The deterioration in fundamentals, coupled with a soaring stock price (+60% year-to-date) due to optimism over RV demand during and after the COVID-19 pandemic, means THO no longer presents the same risk/reward. The firm now receives our Very Unattractive rating. We believe it is time to take the gains and close this long position.
Figure 1: THO vs. S&P 500 – Price Return – Successful Long Call
Sources: New Constructs, LLC and company filings
Note: Gain/Decline performance analysis excludes transaction costs and dividends.
This article originally published on July 31, 2020.
Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.
 Harvard Business School features the powerful impact of our research automation technology in the case New Constructs: Disrupting Fundamental Analysis with Robo-Analysts.
 Our core earnings are a superior measure of profits, as demonstrated in Core Earnings: New Data & Evidence a paper by professors at Harvard Business School (HBS) & MIT Sloan. The paper empirically shows that our data is superior to “Operating Income After Depreciation” and “Income Before Special Items” from Compustat, owned by S&P Global (SPGI).