Intrinsic value of Thor Industries - THO

Previous Close

$132.10

  Intrinsic Value

$2,443

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

-40%

Previous close

$132.10

 
Intrinsic value

$2,443

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

-40%

*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 7.0

 

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
  56.90
  51.71
  47.04
  42.84
  39.05
  35.65
  32.58
  29.82
  27.34
  25.11
  23.10
  21.29
  19.66
  18.19
  16.87
  15.69
  14.62
  13.66
  12.79
  12.01
  11.31
  10.68
  10.11
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
Revenue, $m
  4,582
  7,189
  10,907
  16,037
  22,907
  31,852
  43,206
  57,283
  74,367
  94,700
  118,477
  145,840
  176,885
  211,657
  250,163
  292,373
  338,234
  387,674
  440,613
  496,967
  556,657
  619,614
  685,782
  755,121
  827,611
  903,254
  982,071
  1,064,106
  1,149,426
  1,238,118
  1,330,290
Variable operating expenses, $m
 
  6,046
  9,153
  13,441
  19,182
  26,658
  36,147
  47,912
  62,190
  79,183
  99,055
  121,886
  147,832
  176,893
  209,074
  244,351
  282,679
  323,999
  368,242
  415,340
  465,226
  517,843
  573,142
  631,092
  691,676
  754,895
  820,766
  889,327
  960,633
  1,034,757
  1,111,790
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
  6,397
  9,512
  13,809
  19,560
  27,045
  36,544
  48,319
  62,607
  79,610
  99,493
  122,335
  148,292
  177,364
  209,557
  244,846
  283,187
  324,519
  368,775
  415,887
  465,786
  518,417
  573,731
  631,695
  692,295
  755,529
  821,416
  889,993
  961,316
  1,035,457
  1,112,507
Operating income, $m
  383
  792
  1,394
  2,228
  3,347
  4,807
  6,662
  8,964
  11,760
  15,090
  18,984
  23,506
  28,593
  34,293
  40,606
  47,527
  55,047
  63,155
  71,837
  81,080
  90,870
  101,197
  112,051
  123,425
  135,316
  147,725
  160,655
  174,113
  188,110
  202,661
  217,782
EBITDA, $m
  436
  884
  1,514
  2,386
  3,556
  5,083
  7,023
  9,431
  12,355
  15,836
  19,909
  24,597
  29,918
  35,878
  42,479
  49,716
  57,579
  66,057
  75,136
  84,800
  95,038
  105,836
  117,185
  129,078
  141,512
  154,487
  168,007
  182,079
  196,715
  211,929
  227,741
Interest expense (income), $m
  1
  13
  34
  64
  105
  161
  233
  325
  439
  578
  742
  935
  1,156
  1,407
  1,689
  2,001
  2,342
  2,714
  3,114
  3,543
  3,999
  4,482
  4,992
  5,527
  6,089
  6,675
  7,288
  7,926
  8,590
  9,281
  9,999
Earnings before tax, $m
  383
  780
  1,361
  2,164
  3,242
  4,646
  6,429
  8,639
  11,321
  14,512
  18,242
  22,571
  27,437
  32,886
  38,917
  45,526
  52,705
  60,441
  68,723
  77,537
  86,872
  96,715
  107,059
  117,898
  129,228
  141,050
  153,367
  166,187
  179,520
  193,380
  207,784
Tax expense, $m
  125
  211
  367
  584
  875
  1,254
  1,736
  2,333
  3,057
  3,918
  4,925
  6,094
  7,408
  8,879
  10,508
  12,292
  14,230
  16,319
  18,555
  20,935
  23,455
  26,113
  28,906
  31,832
  34,891
  38,083
  41,409
  44,870
  48,470
  52,213
  56,102
Net income, $m
  257
  569
  993
  1,580
  2,366
  3,392
  4,693
  6,307
  8,264
  10,594
  13,317
  16,477
  20,029
  24,007
  28,409
  33,234
  38,474
  44,122
  50,168
  56,602
  63,416
  70,602
  78,153
  86,065
  94,336
  102,966
  111,958
  121,317
  131,050
  141,167
  151,682

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
  3,319
  5,035
  7,404
  10,576
  14,705
  19,947
  26,447
  34,334
  43,721
  54,698
  67,332
  81,664
  97,718
  115,495
  134,983
  156,156
  178,982
  203,422
  229,440
  256,998
  286,064
  316,612
  348,624
  382,092
  417,015
  453,403
  491,277
  530,668
  571,615
  614,169
Adjusted assets (=assets-cash), $m
  2,115
  3,319
  5,035
  7,404
  10,576
  14,705
  19,947
  26,447
  34,334
  43,721
  54,698
  67,332
  81,664
  97,718
  115,495
  134,983
  156,156
  178,982
  203,422
  229,440
  256,998
  286,064
  316,612
  348,624
  382,092
  417,015
  453,403
  491,277
  530,668
  571,615
  614,169
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
  985
  1,494
  2,197
  3,138
  4,364
  5,919
  7,848
  10,188
  12,974
  16,231
  19,980
  24,233
  28,997
  34,272
  40,055
  46,338
  53,111
  60,364
  68,084
  76,262
  84,887
  93,952
  103,452
  113,383
  123,746
  134,544
  145,783
  157,471
  169,622
  182,250
Working capital, $m
  365
  244
  371
  545
  779
  1,083
  1,469
  1,948
  2,528
  3,220
  4,028
  4,959
  6,014
  7,196
  8,506
  9,941
  11,500
  13,181
  14,981
  16,897
  18,926
  21,067
  23,317
  25,674
  28,139
  30,711
  33,390
  36,180
  39,080
  42,096
  45,230
Total debt, $m
  360
  963
  1,823
  3,009
  4,598
  6,667
  9,294
  12,550
  16,501
  21,204
  26,704
  33,033
  40,214
  48,257
  57,163
  66,926
  77,534
  88,970
  101,215
  114,249
  128,056
  142,618
  157,923
  173,961
  190,728
  208,224
  226,455
  245,430
  265,164
  285,679
  306,999
Total liabilities, $m
  1,060
  1,663
  2,523
  3,709
  5,298
  7,367
  9,994
  13,250
  17,201
  21,904
  27,404
  33,733
  40,914
  48,957
  57,863
  67,626
  78,234
  89,670
  101,915
  114,949
  128,756
  143,318
  158,623
  174,661
  191,428
  208,924
  227,155
  246,130
  265,864
  286,379
  307,699
Total equity, $m
  1,265
  1,656
  2,513
  3,695
  5,277
  7,338
  9,954
  13,197
  17,133
  21,817
  27,294
  33,599
  40,751
  48,761
  57,632
  67,356
  77,922
  89,312
  101,508
  114,490
  128,242
  142,746
  157,989
  173,964
  190,664
  208,090
  226,248
  245,147
  264,803
  285,236
  306,470
Total liabilities and equity, $m
  2,325
  3,319
  5,036
  7,404
  10,575
  14,705
  19,948
  26,447
  34,334
  43,721
  54,698
  67,332
  81,665
  97,718
  115,495
  134,982
  156,156
  178,982
  203,423
  229,439
  256,998
  286,064
  316,612
  348,625
  382,092
  417,014
  453,403
  491,277
  530,667
  571,615
  614,169
Debt-to-equity ratio
  0.285
  0.580
  0.730
  0.810
  0.870
  0.910
  0.930
  0.950
  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
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
  569
  993
  1,580
  2,366
  3,392
  4,693
  6,307
  8,264
  10,594
  13,317
  16,477
  20,029
  24,007
  28,409
  33,234
  38,474
  44,122
  50,168
  56,602
  63,416
  70,602
  78,153
  86,065
  94,336
  102,966
  111,958
  121,317
  131,050
  141,167
  151,682
Depreciation, amort., depletion, $m
  53
  92
  119
  158
  209
  276
  361
  467
  595
  747
  925
  1,092
  1,324
  1,585
  1,873
  2,189
  2,532
  2,902
  3,299
  3,720
  4,167
  4,639
  5,134
  5,653
  6,196
  6,762
  7,352
  7,966
  8,605
  9,269
  9,959
Funds from operations, $m
  369
  661
  1,113
  1,738
  2,576
  3,668
  5,054
  6,773
  8,859
  11,341
  14,241
  17,569
  21,353
  25,591
  30,282
  35,423
  41,007
  47,024
  53,466
  60,323
  67,584
  75,241
  83,287
  91,718
  100,532
  109,728
  119,310
  129,283
  139,655
  150,436
  161,641
Change in working capital, $m
  28
  89
  126
  174
  234
  304
  386
  479
  581
  691
  808
  930
  1,056
  1,182
  1,309
  1,435
  1,559
  1,681
  1,800
  1,916
  2,029
  2,141
  2,250
  2,358
  2,465
  2,572
  2,680
  2,789
  2,901
  3,016
  3,134
Cash from operations, $m
  341
  572
  986
  1,563
  2,342
  3,364
  4,668
  6,295
  8,278
  10,649
  13,433
  16,638
  20,298
  24,409
  28,973
  33,988
  39,447
  45,343
  51,667
  58,407
  65,554
  73,100
  81,037
  89,361
  98,067
  107,156
  116,630
  126,494
  136,754
  147,421
  158,507
Maintenance CAPEX, $m
  0
  -34
  -54
  -82
  -120
  -171
  -238
  -323
  -429
  -557
  -709
  -887
  -1,092
  -1,324
  -1,585
  -1,873
  -2,189
  -2,532
  -2,902
  -3,299
  -3,720
  -4,167
  -4,639
  -5,134
  -5,653
  -6,196
  -6,762
  -7,352
  -7,966
  -8,605
  -9,269
New CAPEX, $m
  -52
  -358
  -509
  -703
  -941
  -1,226
  -1,556
  -1,929
  -2,341
  -2,786
  -3,257
  -3,749
  -4,253
  -4,764
  -5,275
  -5,783
  -6,283
  -6,773
  -7,253
  -7,720
  -8,178
  -8,625
  -9,065
  -9,499
  -9,931
  -10,363
  -10,798
  -11,239
  -11,689
  -12,151
  -12,628
Cash from investing activities, $m
  -601
  -392
  -563
  -785
  -1,061
  -1,397
  -1,794
  -2,252
  -2,770
  -3,343
  -3,966
  -4,636
  -5,345
  -6,088
  -6,860
  -7,656
  -8,472
  -9,305
  -10,155
  -11,019
  -11,898
  -12,792
  -13,704
  -14,633
  -15,584
  -16,559
  -17,560
  -18,591
  -19,655
  -20,756
  -21,897
Free cash flow, $m
  -260
  180
  423
  779
  1,281
  1,967
  2,874
  4,043
  5,509
  7,307
  9,467
  12,002
  14,953
  18,321
  22,113
  26,332
  30,976
  36,038
  41,512
  47,388
  53,656
  60,308
  67,334
  74,727
  82,483
  90,598
  99,070
  107,903
  117,099
  126,665
  136,611
Issuance/(repayment) of debt, $m
  360
  603
  860
  1,187
  1,589
  2,069
  2,626
  3,256
  3,952
  4,703
  5,500
  6,329
  7,181
  8,043
  8,906
  9,763
  10,608
  11,436
  12,245
  13,035
  13,806
  14,562
  15,305
  16,038
  16,767
  17,496
  18,231
  18,975
  19,735
  20,515
  21,320
Issuance/(repurchase) of shares, $m
  0
  32
  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
  635
  860
  1,187
  1,589
  2,069
  2,626
  3,256
  3,952
  4,703
  5,500
  6,329
  7,181
  8,043
  8,906
  9,763
  10,608
  11,436
  12,245
  13,035
  13,806
  14,562
  15,305
  16,038
  16,767
  17,496
  18,231
  18,975
  19,735
  20,515
  21,320
Total cash flow (excl. dividends), $m
  89
  815
  1,283
  1,965
  2,870
  4,036
  5,500
  7,299
  9,460
  12,010
  14,966
  18,332
  22,134
  26,364
  31,020
  36,095
  41,583
  47,474
  53,757
  60,422
  67,463
  74,870
  82,638
  90,766
  99,250
  108,094
  117,301
  126,878
  136,833
  147,179
  157,930
Retained Cash Flow (-), $m
  -200
  -601
  -856
  -1,182
  -1,583
  -2,061
  -2,616
  -3,243
  -3,936
  -4,684
  -5,478
  -6,304
  -7,152
  -8,011
  -8,871
  -9,724
  -10,565
  -11,390
  -12,196
  -12,983
  -13,751
  -14,504
  -15,244
  -15,974
  -16,700
  -17,426
  -18,158
  -18,899
  -19,656
  -20,433
  -21,235
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
 
  424
  427
  784
  1,287
  1,975
  2,885
  4,056
  5,524
  7,326
  9,489
  12,028
  14,982
  18,353
  22,149
  26,371
  31,018
  36,084
  41,561
  47,440
  53,711
  60,366
  67,395
  74,791
  82,550
  90,667
  99,143
  107,978
  117,177
  126,747
  136,696
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
 
  406
  391
  682
  1,060
  1,531
  2,094
  2,740
  3,453
  4,208
  4,975
  5,712
  6,393
  6,978
  7,436
  7,742
  7,882
  7,851
  7,654
  7,304
  6,825
  6,244
  5,592
  4,902
  4,204
  3,527
  2,893
  2,318
  1,813
  1,384
  1,029
Current shareholders' claim on cash, %
  100
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5

Thor Industries, Inc. manufactures a range of recreational vehicles (RVs) in the United States and sells those vehicles primarily in the United States and Canada. The Company's segments include towable recreational vehicles, which consists of the operations of Airstream, Inc. (Airstream) (towable); Heartland Recreational Vehicles, LLC (Heartland) (including Bison Coach, LLC (Bison), Cruiser RV, LLC (CRV) and DRV, LLC (DRV)); Jayco, Corp. (Jayco) (including Jayco towable, Starcraft and Highland Ridge), Keystone RV Company (Keystone) (including CrossRoads and Dutchmen) and K.Z., Inc. (KZ) (including Livin' Lite RV, Inc. (Livin' Lite)); motorized recreational vehicles, which consists of the operations of Airstream (motorized), Jayco (including Jayco motorized and Entegra Coach) and Thor Motor Coach, Inc. (Thor Motor Coach), and Other, which includes the operations of its subsidiary, Postle Operating, LLC (Postle).

FINANCIAL RATIOS  of  Thor Industries (THO)

Valuation Ratios
P/E Ratio 27
Price to Sales 1.5
Price to Book 5.5
Price to Tangible Book
Price to Cash Flow 20.3
Price to Free Cash Flow 24
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 56.9% 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 52.708 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 $7.0 billion.

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COMPANY NEWS

▶ Winnebago Reports Strong Earnings, New Buyback; Stock Rallies   [Oct-19-17 04:02PM  Investor's Business Daily]
▶ Thor Announces Increased Regular Quarterly Dividend   [Oct-10-17 04:15PM  PR Newswire]
▶ Finding Great Stocks: How Many In The IBD 50 Are Really Young?   [Oct-06-17 03:28PM  Investor's Business Daily]
▶ Thor Industries: Cramer's Top Takeaways   [06:48AM  TheStreet.com]
▶ Millennials are making RV stocks rev up   [01:37PM  CNBC Videos]
▶ Jim Cramer Reacts to Thor Industries Earnings   [12:36PM  TheStreet.com Videos]
▶ Stocks Open A Bit Lower; Thor Up On Earnings; China IPO Rises   [09:36AM  Investor's Business Daily]
▶ Thor Thunders Ahead With Record Results   [08:13AM  Motley Fool]
▶ Thor Industries beats Street 4Q forecasts   [Sep-27-17 09:41PM  Associated Press]
▶ Retail Is Dead, Long Live Retail; 5 Stocks Near Buys: Investing Action Plan   [Sep-26-17 04:10PM  Investor's Business Daily]
▶ TrumpCare's Last Gasp; Micron, Nike To Report: Investing Action Plan   [Sep-22-17 04:41PM  Investor's Business Daily]
▶ Thor Industries Trading Near Top Of Buy Zone With Earnings On Deck   [Sep-20-17 12:06PM  Investor's Business Daily]
▶ S&P 500 Futures Jump: 4 Hurricane Stocks To Watch; Apple Is The X Factor   [Sep-11-17 07:15AM  Investor's Business Daily]
▶ Cavco Industries Gets IBD Stock Rating Upgrade   [Sep-06-17 03:00AM  Investor's Business Daily]
▶ Rising Need For Texas Temporary Housing Boosts Thor   [05:36AM  Investor's Business Daily]
▶ Dayton manufacturer expands partnership with Tommy Bahama   [Aug-02-17 05:55AM  American City Business Journals]
▶ Thor Names Director Of Community Engagement   [Aug-01-17 04:15PM  PR Newswire]
▶ "Fast Money" final trades: IWM, FL & more   [Jul-24-17 05:59PM  CNBC Videos]
▶ Which Stocks May Motor Into New Buy Zones? Here's One   [Jun-27-17 04:17PM  Investor's Business Daily]
▶ 3 Stocks That Put NVIDIA Growth to Shame   [Jun-14-17 11:06AM  Motley Fool]
▶ Thor Announces Regular Quarterly Dividend   [Jun-08-17 04:15PM  PR Newswire]
▶ What Happened in the Stock Market Today   [Jun-06-17 05:06PM  Motley Fool]
▶ Thor shares up after earnings beat   [01:44PM  CNBC Videos]
▶ Story Stocks from Briefing.com   [11:49AM  Briefing.com]
Financial statements of THO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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