A month has gone by since the last earnings report for Thor Industries (THO). Shares have lost about 8.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Thor Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
THOR Q4 Earnings Miss Expectations
THOR posted adjusted earnings of 78 cents per share for the fourth quarter of fiscal 2026, missing the Zacks Consensus Estimate of 93 cents by 16.1%. The bottom line fell 66.9% year over year as North American margins came under pressure from lower volumes, promotions and higher costs.
Quarterly revenues of $2.31 billion topped the Zacks Consensus Estimate of $2.15 billion by 7.4% but declined 8.4% year over year. Global independent dealer inventories fell 11.5% from a year earlier, while European growth partly offset weaker North American results.
Margins Contract as Profitability Weakens
Gross profit declined 23% year over year to $285.6 million, while gross margin narrowed 230 basis points to 12.4%. Net income attributable to THOR fell 67.5% to $40.8 million.
Selling, general and administrative expenses decreased to $206.4 million from $237.9 million. Adjusted EBITDA dropped 37.1% to $131.7 million. Management said THOR absorbed a meaningful portion of supplier cost increases to protect retail affordability rather than pass the full burden to dealers and customers.
Towable Sales Slide Amid Dealer Caution
North American Towable net sales fell 22.7% year over year to $687.3 million as unit shipments declined 19.7% to 20,616. Fifth-wheel unit shipments dropped 34.7%.
Gross profit decreased 38.9% to $72.4 million, while gross margin contracted 280 basis points to 10.5% on lower sales, unfavorable mix, promotions and higher material costs. Pretax income fell 77.2% to $17 million. Backlog rose 74.6% to $916.6 million, while dealer inventory fell 16% to 53,330 units and declined 20.6% sequentially.
Motorized Segment Faces Sharper Margin Pressure
North American Motorized net sales declined 10.4% to $499.3 million as unit shipments fell 13.1% to 3,806. A 2.7% increase in overall net price per unit partly offset lower volumes. Class C unit shipments declined 19.1% in the quarter.
Gross margin dropped 600 basis points to 5.3% as material, overhead and warranty cost percentages increased. The segment posted a pretax loss of $5.2 million, while backlog decreased 27.5% to $728.2 million and dealer inventory increased 9.2% to 10,639 units.
THOR Europe Delivers Resilient Top-Line Growth
European RV net sales increased 5% year over year to $969.2 million, supported by a 3.9% rise in unit shipments to 13,370 and a 1.1% increase in overall net price per unit. Favorable currency movements contributed 0.1% to the pricing increase. Sales also benefited from lower promotional activity and a shift toward higher-priced motorized products.
Gross profit rose 3.3% to $148.7 million, while gross margin edged down 30 basis points to 15.3%. Pretax income increased 5.9% to $55 million. European backlog grew 8.4% to $1.65 billion, while dealer inventory declined 7.7% to 20,520 units.
Liquidity Supports Capital Deployment
THOR ended fiscal 2026 with $482 million in cash and cash equivalents and total liquidity of $1.30 billion. Gross debt stood at $875.8 million, while cash from operations for the full fiscal year totaled $321.2 million, down from $577.9 million a year earlier.
During fiscal 2026, THO reduced debt by $59.7 million and repurchased $115.1 million of shares, including $34.3 million in the fourth quarter. Capital expenditures totaled $152.4 million, while the regular quarterly dividend stood at 52 cents per share. The remaining repurchase authorization was $264.2 million as of July 31.
THOR Defers Fiscal 2027 Guidance as Cost Actions Advance
Management expects the fiscal 2027 retail environment to remain relatively flat with fiscal 2026 and held off on issuing annual guidance until it gathers feedback from key September industry events. The company expects current Towable pressures to persist to some degree into the first half of fiscal 2027 and plans to provide full-year guidance later this calendar year.
THOR expects strategic initiatives and restructuring activities to improve its annual earnings profile by more than $100 million once fully implemented. The company has unified its North American RV operations under one group to expand purchasing leverage, standardize operations, align brands and integrate data systems.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -62.15% due to these changes.
VGM Scores
Currently, Thor Industries has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Thor Industries has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Thor Industries, Inc. (THO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).