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by David Gibbs

Earnings: Q4 profits of $0.78 vs. estimates of $0.63 and $0.45 in Q4 last year.

Revenue: Up 51% YoY to $663.8 million, slightly ahead of preliminary guidance.

“I am particularly proud of our improved margins which reflect Thor’s cost-cutting and process efficiency efforts and have resulted in our quarterly and annual earnings being well in excess of analyst consensus estimates,” said Peter B. Orthwein, Thor chairman.

Orthwein also noted that, “[Thor's] bus segment continues to be performing well amidst tenuous market conditions. Thor’s September 2010 acquisition of Heartland RV, coupled with our strong cash position and no outstanding debt, will help fuel additional growth and shareholder value in 2011 and beyond.”

Comment: Shares of Thor Industries, Inc. (NYSE: THO) rallied more than 15% this past Wednesday after the company posted a 64% YoY increase in profits and improved gross margins. Recent macro weakness had many on the Street worried that the world’s biggest recreational vehicle manufacturer would be unable to meet expectations, but loosening credit standards seem to have induced dealerships to restock inventory and a general improvement in the prospects for the RV industry. THO also benefited from its streamlined structure, dominated by many small factories, which allowed it to avoid the financial disasters suffered by two of its largest rivals, Fleetwood Enterprises (FLE) and Monaco Coach Corp (MNC).

Total RV sales were up 67% YoY, with Towable RV sales up 61% and Motorized RV sales up 99%. Bus and ambulance sales were roughly flat YoY. THO’s Q prompted a Citigroup analyst to up his price target $2 to $38 while maintaining a Buy rating. The analyst noted that recent channel checks indicated that, “RV retails sales likely slowed down from July to August but may have picked up in September.”

Overall, this was a very impressive Q, and quite interesting from an anecdotal perspective. On the one hand, it would seem that general economic weakness would lead to slowing sales for RVs, etc. However, on the other hand, the weak economy may be prompting people to turn to RV-related vacations as opposed to dropping big bucks on air fare and hotel rooms. Either way, THO appears to be headed in the right direction.

THO’s next major technical objectives are in the $35.40 range and the $37 range.

Disclosure: No holdings in THO.

Source: Thor Industries Is Headed in the Right Direction

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