A recreational vehicle (RV) is a motor vehicle equipped with amenities available at home. RVs are designed for recreational purpose, much like camping. Per a Global Industry Analysts report, growing passion for “great outdoors” and fondness for “adventure travel” is leading to robust growth in the global RV market.
The current Zacks Industry Rank is 1 for Building Products – Mobile Homes And RV Builders (placing it at the top 1% of the 250 plus Zacks classified industries). The increasing appeal for RVs among young consumers, as they prefer amenities such as Wi-Fi, large refrigerators and televisions, instead of mere camping, has given a boost to the demand for these vehicles.
Two major players in this industry are Thor Industries, Inc. THO and Winnebago Industries, Inc. WGO, each sporting a Zacks Rank #1 (Strong Buy). Again, the VGM Score of Winnebago and Thor Industries are A and B, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
Two other companies in the recreational and luxury vehicles space are REV Group, Inc. REVG and Ford Motor Company F, each carrying a Zacks Rank #3 (Hold). The expected long-term earnings growth rate for REV Group and Ford are 25% and 10.7%, respectively.
In this write up, we give a comparative analysis of Thor Industries and Winnebago, based on various financial metrics.
Price Performance
Winnebago’s shares have gained 69.1% in the last 12 months, while Thor Industries has rallied 54.6%. While both stocks have outperformed the industry (which grew by 53.3%) they belong to, Winnebago clearly scores over Thor Industries.
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Earnings Estimate Revisions
Over the last three months, Thor Industries’ stock has seen the Zacks Consensus Estimate for quarterly earnings remain unchanged at $1.79 per share. The Zacks Consensus Estimate for yearly earnings has moved up 2.6% to $9.10 per share.
Over the past 30 days, Winnebago’s stock has seen the Zacks Consensus Estimate for quarterly and annual earnings being revised upward by 10.9% and 6.6%, to 61 cents and $3.07, respectively.
Earnings Surprise History
Taking a look at the surprise history of both the companies, Winnebago has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 22.3%. On the other hand, Thor Industries has delivered a positive earnings surprise in three of the trailing four quarters, with an average positive earnings surprise of 15.3%.
Valuation
Going by the P/E (F1) multiple, Thor Industries looks cheaper compared with Winnebago.
In case of Thor Industries, the P/E (F1) multiple is 16.6, which is lower than the industry multiple of 17.34. On the other hand, for Winnebago, the P/E (F1) multiple is 18.1.
Growth Expectations
Projected sales growth (F1/FO) for Thor Industries currently stands at 14.4%, whereas that of Winnebago stands at 24.1%.
However, Thor Industries has an expected long-term earnings growth of 25.6%, higher than Winnebago’s 22.8%.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for Thor Industries and Winnebago is 27.8% and 21.5%, respectively. While both the stocks have scored more than the industry’s level of 10.3%, Thor Industries has an edge over Winnebago here.
To Conclude
From the above analysis, we find that both Winnebago and Thor Industries promise a lot to the investors. With respect to metrics such as price performance, earnings estimate revision, earnings surprise history, expected sales growth, and ROE, Winnebago scores over Thor Industries. However with respect to a few other parameters such as valuation and expected earnings growth, Thor Industries fares better than Winnebago.
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