Thor Industries (THO) Q3 Earnings Beat Estimates, Rise Y/Y

Thor Industries Inc. (NYSE:THO) reported third-quarter fiscal 2016 (ended Apr 30, 2016) earnings of $1.51 per share that surpassed the Zacks Consensus Estimate of $1.45. Earnings also increased 26.9% from $1.19 per share recorded in the third quarter of fiscal 2015. Net income from continuing operations went up 24.6% to $79.2 million from $63.6 million in the prior-year quarter.

Revenues rose 9.4% year over year to $1.28 billion and were almost in line with the Zacks Consensus Estimate. The year-over-year improvement was driven by higher sales of towable and motorized RVs, along with benefits from the acquisition of Postle Aluminum Co.

Gross profit margin expanded to 15.7% from 14.2% in the year-ago quarter, led by higher volumes, favorable changes in product mix and year-over-year improvements in material costs.

Segment Results

Sales of Towable RVs went up 1.7% year over year to $934.6 million, driven by rising sales of lower-priced travel trailers, partially offset by lower sales of fifth wheel units. Pre-tax income increased 15.7% to $96.9 million from $83.8 million in the prior-year quarter, backed by favorable product mix and improved material costs.

Revenues from Motorized RVs improved 20.7% to $307.6 million from $254.9 million in the year-ago quarter. The upside was driven by strong dealer and consumer response to new products, including the moderately priced Gas Class A and Class C motorhomes, along with an improvement in the overall market. Pre-tax income from the segment increased 21.5% to $24.1 million from $19.9 million a year ago.

Financial Position

Thor Industries had cash and cash equivalents of $247.3 million as of Apr 30, 2016, up from $183.5 million as of Apr 30, 2015.

Outlook

Thor Industries expects strength in the RV market and shift toward more moderately priced towable products to lead to high-single-digit year-over-year revenue growth in the fourth quarter of fiscal 2016. However, the year-over-year comparison for gross margin in the fourth quarter of fiscal 2016 will be affected by the absence of tariff rebates given on certain imported raw materials in the fourth quarter of fiscal 2015.

Zacks Rank

Currently, Thor Industries carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include Lear Corp. (NYSE:LEA) , Oshkosh Corporation (NYSE:OSK) and Superior Industries International, Inc. (NYSE:SUP) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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