Recreational vehicle (RV) leader Thor industries (THO) is down 4% despite beating quarterly results on the top and bottom line for the seventh quarter in a row.
Demand for RVs has been very strong in recent years. Some fear the cycle has grown long in the tooth, but Thor said solid economic fundamentals and consumer trends support continued industry growth.
Thor reported all-time record second quarter revenues and profit, with double-digit sales growth in both segments -- Towables (+26.9%) and Motorized (+17.9%). Consolidated RV backlog increased nearly 34% to $2.8 billion as of January 31.
Two concerns heading into the report were elevated inventories at dealerships and higher costs.
Thor said overall dealer inventory levels remain healthy. Dealers are optimistic about calendar 2018 demand, with inventories at appropriate levels to support the spring selling season.
The company acknowledged the tight labor market in Northern Indiana (where the company is headquartered) and some inflationary price increases in certain raw materials, setting up tougher year-over-year comparatives in the second half of the fiscal 2018 year.
Still, the company is confident fiscal 2018 will be another year of meaningful growth, but investors appear to be more cautious.
Thor industries had 48% RV retail market share in the US and Canada last year, up from 47.3% in 2016. Much smaller peer Winnebago (WGO) had a ~7% market share, up from 6%.
Thor has a ~$6.2 billion market cap while Winnebago is worth ~$1.4 billion. Both of these cyclical stocks trade at ~13x earnings estimates for the year.