Intrinsic value of Thor Industries - THO

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$97.51

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$97.51

 
Intrinsic value

$2,951

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of THO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.35
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  4,582
  7,331
  11,327
  16,939
  24,578
  34,676
  47,671
  63,988
  84,021
  108,115
  136,557
  169,573
  207,320
  249,890
  297,320
  349,595
  406,663
  468,442
  534,831
  605,724
  681,014
  760,602
  844,406
  932,361
  1,024,428
  1,120,593
  1,220,868
  1,325,296
  1,433,947
  1,546,920
  1,664,340
Variable operating expenses, $m
 
  6,165
  9,504
  14,195
  20,579
  29,018
  39,879
  53,516
  70,258
  90,395
  114,166
  141,721
  173,267
  208,846
  248,485
  292,174
  339,869
  391,500
  446,986
  506,234
  569,158
  635,674
  705,712
  779,221
  856,166
  936,536
  1,020,341
  1,107,617
  1,198,422
  1,292,839
  1,390,972
Fixed operating expenses, $m
 
  351
  359
  368
  378
  387
  397
  407
  417
  427
  438
  449
  460
  471
  483
  495
  508
  520
  533
  547
  560
  574
  589
  603
  619
  634
  650
  666
  683
  700
  717
Total operating expenses, $m
  4,199
  6,516
  9,863
  14,563
  20,957
  29,405
  40,276
  53,923
  70,675
  90,822
  114,604
  142,170
  173,727
  209,317
  248,968
  292,669
  340,377
  392,020
  447,519
  506,781
  569,718
  636,248
  706,301
  779,824
  856,785
  937,170
  1,020,991
  1,108,283
  1,199,105
  1,293,539
  1,391,689
Operating income, $m
  383
  816
  1,463
  2,376
  3,622
  5,271
  7,396
  10,066
  13,346
  17,293
  21,954
  27,404
  33,592
  40,573
  48,351
  56,926
  66,287
  76,421
  87,312
  98,943
  111,296
  124,354
  138,105
  152,537
  167,643
  183,423
  199,877
  217,013
  234,843
  253,381
  272,650
EBITDA, $m
  436
  908
  1,586
  2,541
  3,843
  5,568
  7,790
  10,583
  14,013
  18,140
  23,014
  28,673
  35,144
  42,444
  50,577
  59,543
  69,331
  79,928
  91,316
  103,478
  116,394
  130,048
  144,426
  159,516
  175,313
  191,812
  209,017
  226,935
  245,578
  264,962
  285,110
Interest expense (income), $m
  1
  13
  35
  67
  113
  174
  256
  361
  494
  656
  851
  1,081
  1,348
  1,654
  1,999
  2,382
  2,806
  3,268
  3,768
  4,305
  4,879
  5,489
  6,133
  6,811
  7,523
  8,269
  9,047
  9,859
  10,705
  11,584
  12,499
Earnings before tax, $m
  383
  803
  1,428
  2,309
  3,509
  5,096
  7,139
  9,704
  12,852
  16,637
  21,103
  26,323
  32,244
  38,919
  46,353
  54,543
  63,481
  73,153
  83,545
  94,638
  106,417
  118,866
  131,972
  145,725
  160,120
  175,154
  190,830
  207,154
  224,138
  241,797
  260,151
Tax expense, $m
  125
  217
  386
  623
  947
  1,376
  1,928
  2,620
  3,470
  4,492
  5,698
  7,107
  8,706
  10,508
  12,515
  14,727
  17,140
  19,751
  22,557
  25,552
  28,733
  32,094
  35,632
  39,346
  43,232
  47,292
  51,524
  55,932
  60,517
  65,285
  70,241
Net income, $m
  257
  586
  1,043
  1,686
  2,562
  3,720
  5,212
  7,084
  9,382
  12,145
  15,405
  19,216
  23,538
  28,411
  33,838
  39,816
  46,341
  53,402
  60,988
  69,086
  77,684
  86,772
  96,339
  106,379
  116,888
  127,863
  139,306
  151,223
  163,621
  176,512
  189,910

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  210
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,325
  3,385
  5,229
  7,820
  11,347
  16,009
  22,009
  29,542
  38,791
  49,914
  63,046
  78,289
  95,715
  115,369
  137,267
  161,401
  187,748
  216,270
  246,921
  279,651
  314,411
  351,155
  389,846
  430,453
  472,959
  517,356
  563,651
  611,864
  662,026
  714,183
  768,393
Adjusted assets (=assets-cash), $m
  2,115
  3,385
  5,229
  7,820
  11,347
  16,009
  22,009
  29,542
  38,791
  49,914
  63,046
  78,289
  95,715
  115,369
  137,267
  161,401
  187,748
  216,270
  246,921
  279,651
  314,411
  351,155
  389,846
  430,453
  472,959
  517,356
  563,651
  611,864
  662,026
  714,183
  768,393
Revenue / Adjusted assets
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
  2.166
Average production assets, $m
  627
  1,004
  1,552
  2,321
  3,367
  4,751
  6,531
  8,766
  11,511
  14,812
  18,708
  23,232
  28,403
  34,235
  40,733
  47,895
  55,713
  64,177
  73,272
  82,984
  93,299
  104,203
  115,684
  127,733
  140,347
  153,521
  167,259
  181,566
  196,451
  211,928
  228,015
Working capital, $m
  365
  249
  385
  576
  836
  1,179
  1,621
  2,176
  2,857
  3,676
  4,643
  5,765
  7,049
  8,496
  10,109
  11,886
  13,827
  15,927
  18,184
  20,595
  23,154
  25,860
  28,710
  31,700
  34,831
  38,100
  41,510
  45,060
  48,754
  52,595
  56,588
Total debt, $m
  360
  996
  1,920
  3,218
  4,985
  7,321
  10,326
  14,101
  18,734
  24,307
  30,886
  38,523
  47,253
  57,100
  68,071
  80,162
  93,362
  107,651
  123,008
  139,405
  156,820
  175,229
  194,613
  214,957
  236,252
  258,495
  281,689
  305,844
  330,975
  357,106
  384,265
Total liabilities, $m
  1,060
  1,696
  2,620
  3,918
  5,685
  8,021
  11,026
  14,801
  19,434
  25,007
  31,586
  39,223
  47,953
  57,800
  68,771
  80,862
  94,062
  108,351
  123,708
  140,105
  157,520
  175,929
  195,313
  215,657
  236,952
  259,195
  282,389
  306,544
  331,675
  357,806
  384,965
Total equity, $m
  1,265
  1,689
  2,609
  3,902
  5,662
  7,989
  10,982
  14,742
  19,357
  24,907
  31,460
  39,066
  47,762
  57,569
  68,496
  80,539
  93,686
  107,919
  123,214
  139,546
  156,891
  175,226
  194,533
  214,796
  236,006
  258,161
  281,262
  305,320
  330,351
  356,377
  383,428
Total liabilities and equity, $m
  2,325
  3,385
  5,229
  7,820
  11,347
  16,010
  22,008
  29,543
  38,791
  49,914
  63,046
  78,289
  95,715
  115,369
  137,267
  161,401
  187,748
  216,270
  246,922
  279,651
  314,411
  351,155
  389,846
  430,453
  472,958
  517,356
  563,651
  611,864
  662,026
  714,183
  768,393
Debt-to-equity ratio
  0.285
  0.590
  0.740
  0.820
  0.880
  0.920
  0.940
  0.960
  0.970
  0.980
  0.980
  0.990
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
Adjusted equity ratio
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499
  0.499

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  257
  586
  1,043
  1,686
  2,562
  3,720
  5,212
  7,084
  9,382
  12,145
  15,405
  19,216
  23,538
  28,411
  33,838
  39,816
  46,341
  53,402
  60,988
  69,086
  77,684
  86,772
  96,339
  106,379
  116,888
  127,863
  139,306
  151,223
  163,621
  176,512
  189,910
Depreciation, amort., depletion, $m
  53
  93
  123
  165
  222
  297
  395
  517
  667
  847
  1,060
  1,269
  1,552
  1,871
  2,226
  2,617
  3,044
  3,507
  4,004
  4,535
  5,098
  5,694
  6,322
  6,980
  7,669
  8,389
  9,140
  9,922
  10,735
  11,581
  12,460
Funds from operations, $m
  369
  679
  1,165
  1,850
  2,783
  4,018
  5,606
  7,601
  10,049
  12,992
  16,465
  20,485
  25,090
  30,282
  36,063
  42,434
  49,385
  56,909
  64,992
  73,620
  82,783
  92,466
  102,661
  113,359
  124,557
  136,252
  148,446
  161,144
  174,356
  188,093
  202,370
Change in working capital, $m
  28
  93
  136
  191
  260
  343
  442
  555
  681
  819
  967
  1,123
  1,283
  1,447
  1,613
  1,777
  1,940
  2,100
  2,257
  2,410
  2,560
  2,706
  2,849
  2,990
  3,130
  3,270
  3,409
  3,551
  3,694
  3,841
  3,992
Cash from operations, $m
  341
  810
  1,030
  1,659
  2,524
  3,674
  5,165
  7,046
  9,368
  12,173
  15,498
  19,362
  23,807
  28,834
  34,451
  40,656
  47,445
  54,808
  62,734
  71,210
  80,223
  89,760
  99,811
  110,369
  121,426
  132,982
  145,036
  157,594
  170,662
  184,252
  198,378
Maintenance CAPEX, $m
  0
  -34
  -55
  -85
  -127
  -184
  -260
  -357
  -479
  -629
  -809
  -1,022
  -1,269
  -1,552
  -1,871
  -2,226
  -2,617
  -3,044
  -3,507
  -4,004
  -4,535
  -5,098
  -5,694
  -6,322
  -6,980
  -7,669
  -8,389
  -9,140
  -9,922
  -10,735
  -11,581
New CAPEX, $m
  -52
  -377
  -547
  -769
  -1,046
  -1,383
  -1,780
  -2,235
  -2,744
  -3,301
  -3,897
  -4,523
  -5,171
  -5,832
  -6,498
  -7,162
  -7,818
  -8,464
  -9,095
  -9,712
  -10,315
  -10,904
  -11,481
  -12,050
  -12,613
  -13,175
  -13,738
  -14,307
  -14,885
  -15,477
  -16,087
Cash from investing activities, $m
  -601
  -411
  -602
  -854
  -1,173
  -1,567
  -2,040
  -2,592
  -3,223
  -3,930
  -4,706
  -5,545
  -6,440
  -7,384
  -8,369
  -9,388
  -10,435
  -11,508
  -12,602
  -13,716
  -14,850
  -16,002
  -17,175
  -18,372
  -19,593
  -20,844
  -22,127
  -23,447
  -24,807
  -26,212
  -27,668
Free cash flow, $m
  -260
  398
  427
  806
  1,350
  2,107
  3,125
  4,454
  6,144
  8,243
  10,792
  13,817
  17,366
  21,450
  26,082
  31,269
  37,010
  43,300
  50,132
  57,494
  65,373
  73,758
  82,636
  91,997
  101,833
  112,138
  122,909
  134,147
  145,855
  158,039
  170,711
Issuance/(repayment) of debt, $m
  360
  636
  924
  1,298
  1,767
  2,336
  3,006
  3,774
  4,634
  5,573
  6,579
  7,637
  8,731
  9,847
  10,971
  12,091
  13,200
  14,290
  15,356
  16,398
  17,415
  18,409
  19,384
  20,344
  21,295
  22,243
  23,194
  24,154
  25,131
  26,131
  27,159
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  350
  636
  924
  1,298
  1,767
  2,336
  3,006
  3,774
  4,634
  5,573
  6,579
  7,637
  8,731
  9,847
  10,971
  12,091
  13,200
  14,290
  15,356
  16,398
  17,415
  18,409
  19,384
  20,344
  21,295
  22,243
  23,194
  24,154
  25,131
  26,131
  27,159
Total cash flow (excl. dividends), $m
  89
  1,034
  1,351
  2,104
  3,117
  4,443
  6,130
  8,228
  10,778
  13,816
  17,371
  21,454
  26,097
  31,297
  37,053
  43,360
  50,210
  57,590
  65,488
  73,891
  82,788
  92,167
  102,020
  112,342
  123,129
  134,381
  146,103
  158,302
  170,986
  184,170
  197,870
Retained Cash Flow (-), $m
  -200
  -634
  -920
  -1,293
  -1,760
  -2,326
  -2,994
  -3,759
  -4,615
  -5,551
  -6,553
  -7,606
  -8,696
  -9,807
  -10,927
  -12,043
  -13,147
  -14,232
  -15,295
  -16,332
  -17,345
  -18,335
  -19,307
  -20,263
  -21,210
  -22,154
  -23,101
  -24,058
  -25,031
  -26,026
  -27,051
Prev. year cash balance distribution, $m
 
  210
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  610
  431
  811
  1,357
  2,116
  3,137
  4,469
  6,163
  8,266
  10,819
  13,847
  17,401
  21,489
  26,126
  31,317
  37,062
  43,357
  50,193
  57,559
  65,443
  73,832
  82,714
  92,079
  101,918
  112,227
  123,002
  134,244
  145,955
  158,144
  170,819
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  585
  395
  706
  1,118
  1,640
  2,276
  3,019
  3,852
  4,748
  5,672
  6,576
  7,426
  8,171
  8,771
  9,194
  9,418
  9,434
  9,244
  8,862
  8,316
  7,637
  6,863
  6,035
  5,191
  4,366
  3,589
  2,881
  2,258
  1,726
  1,286
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Thor Industries, Inc., through its subsidiaries, designs, manufactures, and sells recreational vehicles, and related parts and accessories primarily in the United States and Canada. It operates through Towable Recreational Vehicles and Motorized Recreational Vehicles segments. The company offers travel trailers under the Airstream International, Classic Limited, Sport, Flying Cloud, Land Yacht, and Eddie Bauer trade names, as well as Interstate and Autobahn Class B motorhomes; gasoline and diesel Class A and Class C motorhomes under the Four Winds, Hurricane, Chateau, Challenger, Tuscany, Axis, Vegas, Palazzo, Synergy, Quantum, Compass, Gemini, A.C.E, Alante, Precept, Greyhawk, and Redhawk trade names; and fifth wheels under the Redwood and DRV Mobile Suites trade names. It also provides conventional travel trailers and fifth wheels under the Montana, Springdale, Hideout, Sprinter, Outback, Laredo, Alpine, Bullet, Fuzion, Raptor, Passport, Cougar, Coleman, Kodiak, Aspen Trail, Voltage, Cameo, Cruiser, ReZerve, Sunset Trail, Zinger, Landmark, Bighorn, Sundance, Elkridge, Trail Runner, North Trail, Cyclone, Torque, Prowler, Wilderness, Shadow Cruiser, Fun Finder, Stryker, Sportsmen, Spree, Venom, Durango, SportTrek, Connect, Sportster, Sonic, Jay Flight, Jay Feather, Eagle, Pinnacle, Seismic, AR-One, Launch, Autumn Ridge, Travel Star, Highlander, Roamer, and Open Range trade names. In addition, the company offers equestrian recreational vehicle products with living quarters under the Premiere, Silverado, Ranger, Laredo, Trail Boss, and Trail Hand trade names; lightweight travel trailers and specialty products under the Camplite and Quicksilver trade names; and Class A motorhomes under the Insignia, Aspire, Anthem, and Cornerstone trade names, as well as provides aluminum extrusions and specialized component products. The company markets its recreational vehicles through independent dealers. Thor Industries, Inc. was founded in 1980 and is based in Elkhart, Indiana.

FINANCIAL RATIOS  of  Thor Industries (THO)

Valuation Ratios
P/E Ratio 19.9
Price to Sales 1.1
Price to Book 4
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 17.7
Growth Rates
Sales Growth Rate 14.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 23.8%
Cap. Spend. - 3 Yr. Gr. Rate 16.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 28.5%
Total Debt to Equity 28.5%
Interest Coverage 384
Management Effectiveness
Return On Assets 13.5%
Ret/ On Assets - 3 Yr. Avg. 13.4%
Return On Total Capital 19.1%
Ret/ On T. Cap. - 3 Yr. Avg. 19.2%
Return On Equity 22.1%
Return On Equity - 3 Yr. Avg. 20.2%
Asset Turnover 2.4
Profitability Ratios
Gross Margin 15.8%
Gross Margin - 3 Yr. Avg. 14.4%
EBITDA Margin 9.5%
EBITDA Margin - 3 Yr. Avg. 8.5%
Operating Margin 8.4%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 8.4%
Pre-Tax Margin - 3 Yr. Avg. 7.6%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 32.6%
Eff/ Tax Rate - 3 Yr. Avg. 31.4%
Payout Ratio 24.5%

THO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the THO stock intrinsic value calculation we used $4582 million for the last fiscal year's total revenue generated by Thor Industries. The default revenue input number comes from 2016 income statement of Thor Industries. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our THO stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for THO is calculated based on our internal credit rating of Thor Industries, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Thor Industries.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of THO stock the variable cost ratio is equal to 84.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $342 million in the base year in the intrinsic value calculation for THO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Thor Industries.

Corporate tax rate of 27% is the nominal tax rate for Thor Industries. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the THO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for THO are equal to 13.7%.

Life of production assets of 18.3 years is the average useful life of capital assets used in Thor Industries operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for THO is equal to 3.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1265 million for Thor Industries - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 52.221 million for Thor Industries is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Thor Industries at the current share price and the inputted number of shares is $5.1 billion.


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Stock chart of THO Financial statements of THO
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