THOR INDUSTRIES INC (THO) stock intrinsic value fair value estimate & owner earnings analysis

Thor is the world's largest maker of recreational vehicles, and its cash earnings swing violently with the RV cycle. Over the past decade, owner earnings - the cash left after capital spending and the cost of shares issued to employees - ran near $5.30 a share in fiscal 2016, climbed steadily to about $7.50 by 2020, spiked to roughly $13.00 to $13.60 during the RV boom of 2022 and 2023, then fell back to $6.85 and $7.94 in 2024 and 2025 as dealers worked down bloated inventories. Revenue has declined five straight years from a $16.3 billion peak to $9.6 billion, though sales in the first nine months of fiscal 2026 finally turned modestly higher. The whipsaw between dealers overstocking and destocking is how this industry always behaves, not a one-off shock, so the weak years are treated as a fair picture of the downside rather than an aberration, and the business is valued on a full-cycle average of roughly $420 million of owner earnings rather than on either extreme. Management has used the cycle well, cutting borrowings from about $1.9 billion after the 2019 Erwin Hymer purchase to under $0.9 billion while still paying dividends and repurchasing stock; fixed lease obligations are trivial at about $44 million. The downside case assumes cash earnings settle near $290 million with no growth and demands a 12% annual return, giving about $38 a share. The middle case assumes a normal recovery with 3.5% growth at a 10% return, near $104. The optimistic case assumes a full cycle upturn, about $193. Because the low case is the one to trust least in a business this cyclical, that is the anchor, with roughly a third taken off it - so the margin-of-safety price is about $26, a level that historically has appeared mainly in a genuine recession.