Quick Summary

Thor Industries (THO) is the largest manufacturer of recreational vehicles (RVs) in the world. The company sells both towable and motorized RVs. Towable RVs include travel trailers and fifth wheels, both of which are pulled by a separate vehicle and provide self-contained living facilities for camping and vacations. Motorized RVs are self-contained vehicles with their own power, lighting, water, refrigeration, and even sewage systems. Thor breaks its revenues into three categories. North American Towables account for 51% of sales, European RV (towable and motorized) account for 32% of sales (acquired with EHG in 2019), and North American motorized is 16% of sales. Thor owns numerous RV brands, including Airstream, Keystone, Dutchmen, CrossRaods, Heartland, KZ, Jayco, Starcraft, Eriba, Elddis, and a number of others.

Photo by Togo RV on Unsplash

Does The Company Have Rising and Recurring Revenues?

SOMEWHAT. Thor has seen inconsistent growth rates over the past 5-10 years. Over the past 3 years, though, its growth rate is unimpressive at just 4%. An RV "boom" in the mid-2010s, augmented by a large acquisition of Jayco in 2016, was followed by a lull in 2019 and a current rebound driven by increased outdoor activity after the COVID-19 pandemic. Thor expects excellent results in 2021, with shipments expected to grow 20%. Long-term, we don't see the RV space as a great growth industry. Industry associations expect about 5% growth annually through 2026. Much of Thor's growth over the past 10 years has been driven by acquisition, with another large purchase in 2019 (Erwin Hymer Group) propping up results. Finally, these are clearly not recurring revenues. RVs are the epitome of a "one-time" purchase, and Thor has to constantly compete for every sale it earns.

Does The Company Have Durable Competitive Advantages?

NO. Thor is the largest maker of RVs, with about 51% market share in towables and 40% in motorized, but this isn't the kind of out-sized market dominance that gives a company any notable advantages. Some of its brands are well-known (notably Airstream and Jayco in the U.S., and Eriba in Europe), but no more so than competitors like Winnebago (WGO), Coachmen, or Fleetwood. Both pricing and gross margin is similar to competitors, an indication that no real brand advantage or economies of scale exist here.

GreenDot Rating

Thor is a RED (unattractive) business, although the company has a history of strong management and reasonably good shareholder returns. There just isn't much interesting to warrant an investment here. The RV industry has seen pretty good growth, but it is largely a market share game at this point. Thor faces strong competition and has few durable competitive advantages. We are seeing the company employ an aggressive acquisition strategy that is a risky and expensive way to grow. Finally, the business itself consists of non-recurring, "one-time" purchases and is highly sensitive to general economic conditions. Thor is not a stock we would recommend owning over long periods of time.