THOR Unveils Buyback Plan: Should You Buy the Stock Now?
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With a forward 12-month price-to-sales (P/S) ratio of 0.47, THOR looks undervalued compared to the industry ratio of 0.67.
Image Source: Zacks Investment Research
Strategic acquisitions have fueled Thor's market position. The acquisitions of EHG and TiffinHomes have brought commercial synergies, making Thor the world's largest RV manufacturer and expanding its product portfolio. The EHG buyout has bolstered its foothold in the European market. The acquisition of Airxcel strengthens the supply chain and diversifies revenues, especially in the aftermarket business. The Elkhart buyout has helped Thor secure an unconstrained supply of Elkboard.Thor Industries is expanding its revenue streams beyond its core RV segments through strategic initiatives like RV Partfinder and its North American parts strategy. RV Partfinder improves the customer and dealer experience by reducing repair cycle times and enhancing service efficiency, encouraging loyalty and repeat business. THOR plans to formally unveil the launch of this parts initiative in September 2025.THOR has implemented sourcing strategies that reduce the impact of tariffs by sourcing a significant portion of raw materials and products domestically. While some motorized chassis are imported, most models use locally produced chassis. Although some cost increases are expected for certain imported components, THOR believes that the combined efforts of suppliers, OEMs and dealers across the RV supply chain will help offset tariff effects and maintain competitive pricing.In June 2025, it retired the company's prior share repurchase authorization, which was originally set to expire on July 31, 2025, and approved a new authorization permitting the repurchase of up to $400 million of its common stock. This new authorization will remain in effect until July 31, 2027.
Although the fiscal third quarter was strong, Thor expects margin pressures to persist as it navigates weaker retail and wholesale demand in North American Motorized and European segments. The company expects the fiscal 2025 consolidated gross profit margin to be in the range of 13.8-14.5% compared to 14.5% recorded in fiscal 2024.The upcoming model year transition and the uncertainty caused by changing macroeconomic conditions have resulted in a decline in Thor's backlog, which doesn't bode well for its sales. As of April 30, 2025, order backlog in North American Towable, North American Motorized and European units fell 14.4%, 4.5% and 30.6%, respectively, on a year-over-year basis.Thor foresees substantial investments in automation and innovation strategies, causing an uptick in SG&A expenses as a percentage of sales. This is exerting pressure on profit margins. The company expects consolidated SG&A costs to be approximately 9.5% of net sales for fiscal 2025, up from 8.9% in fiscal 2024.
While THOR's new $400 million share repurchase authorization reflects its strong financial position and makes it an attractive choice, it doesn't necessarily mean it's the right time to buy the stock.Despite a strong fiscal third quarter, THOR faces several near-term challenges. The company anticipates continued margin pressure due to weaker retail and wholesale demand, particularly in North America and Europe. A shrinking backlog and higher SG&A expenses linked to investments in automation and innovation may weigh on profitability. For existing investors, THOR's expanding revenue stream and commitment to shareholder returns offer reasons to hold the stock. But for new investors, a wait-and-watch approach looks like a more prudent choice. Currently, THOR carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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