Here's Why You Should Retain THOR Stock in Your Portfolio Now

THOR Industries, Inc. THO, the largest manufacturer of RVs in the world, is set to gain from strategic acquisitions and balance sheet strength. However, declining backlog and rising SG&A expenses remain a concern for the RV maker.

Let’s see why you should retain this Zacks Rank #3 (Hold) stock in your portfolio.

Strategic Acquisitions, Multiple Revenue Streams to Aid THOR

Strategic acquisitions have fueled THOR’s market position. The acquisitions of EHG and TiffinHomes have brought commercial synergies, making Thor the world's largest RV manufacturer and expanding its product portfolio. The EHG buyout has bolstered its foothold in the European market. The acquisition of Airxcel strengthens the supply chain and diversifies revenues, especially in the aftermarket business. The Elkhart buyout has helped Thor secure an unconstrained supply of Elkboard.

THOR Industries is expanding its revenue streams beyond its core RV segments through strategic initiatives like RV Partfinder and its North American parts strategy. RV Partfinder improves the customer and dealer experience by reducing repair cycle times and enhancing service efficiency, encouraging loyalty and repeat business. 

THOR has implemented sourcing strategies that reduce the impact of tariffs by sourcing a significant portion of raw materials and products domestically. While some motorized chassis are imported, most models use locally produced chassis. Although some cost increases are expected for certain imported components, THOR believes that the combined efforts of suppliers, OEMs and dealers across the RV supply chain will help offset tariff effects and maintain competitive pricing.

Balance sheet strength also sparks optimism. It has a debt-to-capital ratio of 0.19 compared to the auto sector’s 0.33. Low leverage gives the company enough flexibility to tap into growth opportunities. The RV maker is also committed to enhancing shareholders' value. Its five-year annualized dividend growth is 4.89%. In fiscal 2025, Thor paid $15.8 million in quarterly dividends.

THO's EV push is poised to bolster its prospects in the ever-evolving world of transportation. Recognizing e-mobility as the future, the company has been diligently working on its electrification strategies. As a leader in the industry, THOR has harnessed emerging technology and extensive research to create adaptable platforms for future products. THOR's strategic partnership with Harbinger is set to expedite its plans to electrify its entire RV lineup, including larger Class A motorhomes.

Declining Backlog, Rising Expenses to Ail THOR

The upcoming model year transition and the uncertainty caused by changing macroeconomic conditions have resulted in a decline in THOR’s backlog, which doesn’t bode well for its sales. As of July 31, 2025, order backlog in North American Towable and European units fell 5% and 21.8%, respectively, on a year-over-year basis.

The Recreational Vehicle Industry Association’s latest forecast projects North American wholesale RV shipments for calendar 2025 to range between 320,400 units and 353,500 units, with the most likely outcome around 337,000 units. This suggests about a 6% drop in industry shipments during the second half of 2025 compared to the same period in 2024. The decline in shipments may hurt the RV maker’s top line. Moreover, the company may have to offer discounts to avoid inventory buildup, which might hurt its margins.

Thor foresees substantial investments in automation and innovation strategies, causing an uptick in SG&A expenses as a percentage of sales. This is exerting pressure on profit margins. In fiscal 2025, consolidated SG&A costs were 9.6% of net sales, up from 8.9% in fiscal 2024.

Stocks to Consider

Some better-ranked stocks in the auto space are Dorman Products, Inc. DORM, China Yuchai International Limited CYD and PHINIA Inc. PHIN, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for DORM’s 2025 sales and earnings implies year-over-year growth of 7.9% and 22.7%, respectively. EPS estimates for 2025 and 2026 have improved 3 cents and 19 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for CYD’s 2025 sales and earnings implies year-over-year growth of 54.1% and 87.7%, respectively. EPS estimates for 2025 have improved 58 cents in the past 60 days.

The Zacks Consensus Estimate for PHIN’s 2025 earnings implies year-over-year growth of 18.1%. EPS estimates for 2025 and 2026 have improved by 22 cents and 15 cents, respectively, in the past 60 days.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research