Thor Industries
THO
recently announced the acquisition of Elkhart Composites, Inc. by its subsidiary Airxcel, Inc.
Indiana-based Elkhart develops and sells proprietary foamed polypropylene-based composite material under the Elkboard brand, which is a sustainable material not vulnerable to decay. Known for its durability and rigidness, this solution is used in the recreational vehicle (RV) industry for sidewalls, thereby reducing the industry’s dependence on the traditional lauan-based sidewalls.
Thor is highly optimistic about the takeover. The RV industry has depended on lauan wood sourced from tropical hardwood forests for years. However, amid the recent aggravating supply-chain constraints, the ability to source such materials from the other side of the world has become severely limited and the quality of the available lauan product is also a cause of concern. Hence, this acquisition will provide Thor with an unconstrained supply of Elkboard, which is far more sustainable and fabricated locally. Further, its rigid quality control will provide consistency in the available material.
Also, Elkboard is a superior and state-of-the-art product already utilized in many of Thor’s RV offerings. The RV maker anticipates that with the help of an additional R&D investment into the Elkboard product, it can be utilized as a solution in several other RV applications along with sidewalls.
Thor also believes that Elkboard has a rampant growth ability. The company has been purchasing all of the Elkboard manufactured only to support a fraction of the RVs it produces. THO and Airxcel have already vowed to make substantial capital investments into Elkboard to boost its current production capacity.
The latest acquisition came at a fortunate time, representing the first opportunity for Thor to build upon its recent Kansas-based Airxcel acquisition, which was aimed at diversifying and bolstering the former’s revenues, especially in the aftermarket business.
Elkhart is equally ecstatic about the takeover. As demand for the Elkboard product started to surpass the company’s ability to manufacture it, Elkhart was on the lookout for the right partner to team up with for enhancing the production and utilization of Elkboard. Thor was the best choice for teaming up due to its suite of sustainable technologies and products combined with its focus on innovation.
Thor currently carries a Zacks Rank #3 (Hold). The Airxcel buyout has fortified Thor’s supply chain business in North America and Europe to meet the growing demand for RVs and provide the firm with attractive long-term growth opportunities. However, tight labor markets and the rising cost of commodities are concerns at the moment. Escalating SG&A costs and stiff competition within the RV industry remain other headwinds. Thus, the stock warrants a cautious stance now.
Auto Companies to Focus on
A few better-ranked stocks from the auto space include
Tesla
TSLA
,
Harley-Davidson
HOG
and
Goodyear Tire
GT
, all of which sport a Zacks Rank of 1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
Tesla has an expected earnings growth rate of 166.96% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 6 cents over the last 30 days.
Tesla beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. TSLA has a trailing four-quarter earnings surprise of 25.38%, on average. Its shares have rallied 74% over the past year.
Harley-Davidson has an expected earnings growth rate of 34.92% for the current quarter. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 2 cents over the last 30 days.
Harley-Davidson beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. HOG has a trailing four-quarter negative earnings surprise of 138.45%, on average. Its shares have dropped around 3.6% over the past year.
Goodyear has an expected earnings growth rate of 196.86% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 42 cents over the last 30 days.
Goodyear beat the Zacks Consensus Estimate for earnings in the last four quarters. GT has a trailing four-quarter earnings surprise of 228.45%, on average. Its shares have rallied 101.8% over the past year.
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