Thor Industries (THO) took a big hit on the stock market a day after announcing its purchase of the Hymer RV Group when the company reported a bigger-than-expected fiscal fourth-quarter earnings decline, even though sales weren’t as bad as expected. Thor stock tumbled as the company also warned of weakness in the next two quarters, reports Investor’s Business Daily.
Estimates: Wall Street expected Thor earnings per share to tumble 14% to $1.93 per share, according to Zacks Investment Research. Revenue was seen slipping 7% to $1.804 billion.
Results: Thor earnings plunged to $1.67 a share as sales sank 3% to $1.87 billion. Towable RV revenue was flat while motorized RVs saw a decline.
“Due to dealer order strength experienced in the first half of fiscal 2018, we are planning for tougher year-over-year comparisons in the first half of fiscal 2019 with more favorable top-line growth rates in the second half of the fiscal year,” CEO Bob Martin said. “Similar to the quarterly progression of our top line, we anticipate gross margin pressure to be greater in the first half of the year.”
Shares plunged 7.2% in premarket trading on the stock market today. Thor’s iconic rival Winnebago (WGO) was off 2.7%.
Thor stock popped Tuesday after it announced it is working to break into the lucrative European market. This is the rationale behind the firm inking a roughly $2.5 billion deal to buy German rival Erwin Hymer Group.
Under the cash and stock deal, the American recreational vehicle giant will acquire the privately held firm by the end of the year. In total, $1.9 billion in cash and 2.3 million of shares of Thor, the world’s biggest RV maker, are being handed over to close the transaction.
Thor believes the deal will provide an immediate boost to earnings. This is before cost cuts, transaction-related expenses and accounting adjustments due to the purchase are taken into account. Hymer expects to generate revenue of some $2.9 billion for the fiscal year ended Aug. 31.