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On Thursday, Benchmark analyst Michael Albanese maintained a Hold rating on Thor Industries Inc. (NYSE:THO) without specifying a price target. Albanese highlighted the company’s anticipated $350 million in unlevered free cash flow (FCF) for the fiscal year 2025. According to InvestingPro data, the stock has recently entered oversold territory, with shares trading near their 52-week low of $78.88. Despite the recent pullback in Thor Industries’ stock price, which has increased the FCF yield to 7%, the analyst noted that this yield still ranks low compared to industry peers. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.71, indicating liquid assets exceed short-term obligations. The company has also demonstrated remarkable dividend consistency, maintaining payments for 39 consecutive years.
Albanese pointed out several factors for maintaining a cautious stance, including uncertainty in the European market, pressures in the Motorized segment, and share attrition in the Towable division. While acknowledging that the company’s business model could see benefits from absorption leverage during an upcycle, the analyst prefers to adopt a wait-and-see approach due to the current challenges. The stock’s recent performance reflects these concerns, with InvestingPro data showing a significant 17.1% decline in the past week alone. Subscribers to InvestingPro can access 10+ additional exclusive insights about Thor Industries’ market position and future outlook.
The analyst also mentioned that potential catalysts such as a demand rebound, clearer share gains, or share buybacks could shift his perspective to a more constructive stance on Thor Industries. However, for the time being, the firm chooses to observe these developments before changing its position.
Thor Industries’ stock is currently trading at approximately 8 times its forecasted FY25 Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (AEBITDA) and just above 1 times book value. According to Albanese, this valuation is around a historical support level for the company. Despite the more attractive valuation, Benchmark’s outlook remains unchanged as they seek further evidence of share gains or a more definitive trend in the industry cycle. Current InvestingPro Fair Value analysis suggests the stock is undervalued, with the company maintaining moderate debt levels and projected profitability for the current year.
In other recent news, Thor Industries reported fiscal second-quarter earnings that fell short of analyst expectations, with a loss of $0.01 per share compared to the anticipated earnings of $0.08 per share. However, the company’s revenue exceeded forecasts, reaching $2.02 billion against the expected $1.97 billion. Despite this revenue beat, net sales decreased by 8.6% year-over-year, influenced by reduced shipments in its North American Motorized and European RV segments. Thor Industries also revised its full-year fiscal 2025 guidance, now expecting consolidated net sales between $9.0 billion and $9.5 billion and lowering its EPS forecast to a range of $3.30 to $4.00.
Following these developments, several analyst firms adjusted their outlooks for Thor Industries. DA Davidson reduced its stock price target to $80, citing the company’s cautious approach amid challenging market conditions. BMO Capital Markets also revised its target, lowering it to $105 while maintaining an Outperform rating, noting the company’s struggles in the European market. KeyBanc Capital Markets kept a Sector Weight rating, highlighting the revised EPS guidance and the uncertainties affecting investor sentiment.
Additionally, Truist Securities decreased its price target to $90, reflecting a more guarded stance on Thor Industries’ earnings recovery. The firm maintained a Hold rating, suggesting that significant catalysts would be necessary for a more optimistic view. Thor Industries’ recent financial performance and guidance adjustments have prompted these analyst revisions, underscoring the current challenges and macroeconomic pressures facing the company.
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