Thor Industries, Inc. (NYSE: THO), a market leader in recreational vehicles, is part of an industry that has come in the firing line of coronavirus, and the epidemic-related disruption is taking a heavy toll on all travel-related businesses. Currently, uncertainty looms over the future of Thor and its peers, due to the the market turmoil.
Since the company sources raw materials from the regions affected by the pandemic, supply chain disruptions will affect the business, though it remained resilient to the crisis in the initial weeks. With the peak season approaching, the current volatility could be a concern for the stakeholders. The main risk is that the company is dependent on a single dealer for about one-fifth of its business.
Though things don’t look very promising, at least for the time being, the strong order book and positive demand trend indicate the company would survive the crisis and get back on track. So, those looking for long-term investments can consider adding Thor to their portfolio.
Thor has enjoyed stable demand for its products and is focused on expanding the business. Hymer USA, a unique facility being planned at Bristol, is expected to help the company broaden its market share in North America, though the recent setback has put the venture in limbo. Erwin Hymer Group, the European firm that joined the Thor fold one year ago, has been a key contributor to revenues since then.
Almost all the analysts following Thor believe the stock is a good buy, with the price estimated to double in the long term. The company’s earnings performance has been average in the past, in terms of beating the estimates.
Thor ended the first half of 2020 on a positive note, posting earnings of $0.52 per share compared to a loss last year. The improvement reflects a marked increase in revenues to $2 billion. While the top-line exceeded the market’s expectations, earnings missed.
After shifting to recovery mode in mid-2019, Thor’s shares maintained the uptrend during the remainder of the year and beyond. But the stock started declining a few weeks ago and has lost 56% since then.
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