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Thor (THO) Q1 Earnings & Revenues Lag Estimates, Down Y/Y

Thor Industries, Inc.THO reported first-quarter fiscal 2019 (ended Oct 31, 2018) adjusted earnings of $1.28 per share, missing the Zacks Consensus Estimate of $1.52. Excluding acquisition-related costs, earnings for the reported quarter were 26 cents per share. In the prior-year quarter, adjusted earnings per share were $2.43. Net income declined to $14 million from $128.4 million in the prior-year quarter, majorly due to high effective tax rate.

In the quarter under review, revenues slumped 21.3% year over year to $1.76 billion. The figure also lagged the Zacks Consensus Estimate of $1.87 billion.

Gross profit was $207 million compared with $333 million recorded in first-quarter fiscal 2018. Moreover, gross profit margin decreased to 11.8% compared with 14.9% in the year-ago quarter. The margin plummeted from the prior-year figure, majorly due to increased sales promotions and costs related to warranty expenses.

Thor Industries, Inc. Price, Consensus and EPS Surprise

Thor Industries, Inc. Price, Consensus and EPS Surprise | Thor Industries, Inc. Quote

High effective tax rate hampered the company's profit margin beside rise in material costs on the implementation of tariffs. During the quarter under review, effective tax rate was 55.7% compared with 31.4% in the prior year. Thor expects normalized effective tax rate to return to 23-25% in the second half of fiscal 2019.

Segment Results

Sales of Towable RVs went down 21% year over year to $1.28 billion. The slump was due to lower unit volume and increased discounts on products. Augmented material and warranty costs lowered the segment's gross profit margin to 12%.

Sales from Motorized RVs declined 23.9% year over year to $431.2 million due to lower volume sales. This also lowered the segment's gross profit margin to 10.3%.

Financial Position

As of Oct 31, 2018, Thor had cash and cash equivalents of $225 million, down from $275 million as of Jul 31, 2018.

At the end of first-quarter fiscal 2019, Thor's operating cash outflow was $15.8 million compared with an inflow of $13.4 million during the same period in the previous fiscal year.

Zacks Rank & Stocks to Consider

Thor currently carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the auto space are CarGurus, Inc. CARG , Cooper Tire & Rubber Company CTB , and General Motors Company GM , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

CarGurus has an expected long-term growth rate of 5%. Shares of the company have increased by 2.3% over the past six months.

Cooper Tire has an expected long-term growth rate of 4%. Shares of the company have rallied 14.9% over the past six months.

General Motors has an expected long-term growth rate of 8.5%. Over the past three months, shares of the company have gained 2.7%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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