What Is The Backlog Telling Us?
It is really difficult to nitpick with this company. It has delivered out-sized growth and earnings for several quarters now. Unit growth and pricing have been solid. While revenue was robust last quarter the average selling price also rose by 3% Y/Y. I have always suspected that a slow down in revenue growth would be the death knell for Thor. Predicting that slow down has been a lesson in futility.
The company’s backlog of $2.8 billion was up over 30% Y/Y and represents about 200% of this quarter’s revenue; the company also has a sizeable share of next quarter’s revenue already included in its backlog. The stock is up 30% Y/Y. The the only thing I envision slowing Thor would be a pullback in the broader markets or a crack in the RV industry’s overall sales. I believe the former could happen first.
Is Thor’s Glass Half Empty?
The melt up in stocks could be coming to an end after the Fed takes liquidity out of the financial system and/or implements multiple rate hikes. I expect Thor’s revenue and earnings to be strong in the near term. A 9.4x EBITDA trading multiple appears paltry given Thor’s earnings growth. However, worries over rising interest rates and or a decline in the availability of credit could create headwinds for the stock. The glass appears half empty. I rate THO a hold.
