Thor Calls Booming After Blowout Earnings

Thor Industries' third-quarter profits and revenue were better than Wall Street expected

Thor Industries, Inc. (NYSE:THO) stepped up to the earnings plate this morning and knocked it out of the park, reporting fiscal third-quarter profits of 43 cents on revenue of $1.68 billion, both of which came in higher than Wall Street's estimates. Additionally, the recreational vehicle manufacturer said it was able to adjust its cost structure to offset the negative impact brought on by coronavirus-related closures, and sales began to pick back up in May as dealerships opened back up. As a result, the shares of THO are surging, last seen up 9% to trade at $108.50, hitting a new multi-year high of $110.99 out of the gate and on track for their sixth straight win.

On the charts, Thor stock has climbed to two-year highs in each of its last five closes, a far-cry away from its mid-March low of $32.30. The stock has added a staggering 209.6% since then, resulting in a 34.6% year-to-date gain. Guiding THO higher is its 10-day moving average, a trendline that's been a consistent level of support for much of the last three months.

Still, analysts are approaching Thor stock with some caution, and a shift in sentiment could fuel even more tailwinds. Of the 11 in coverage, seven rate the security a tepid "hold" or worse. Meanwhile, the 12-month consensus price target of $71.57 is a 34.8% discount to current levels, and could signal that a flurry of upgrades and/or price-target hikes could be on the horizon.

Meanwhile, the preference for calls is strong in the options pits, amid limited absolute volume. Thor's 50-day call/put volume ratio of 1.13 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the slightly elevated 79th percentile of its annual readings. This implies a relatively healthy appetite for long calls among traders.

Today is more of the same. At last check, over 2,400 calls have changed hands, eight times the average intraday amount and almost five times the number of puts traded. The June 125 and 115-strike calls are the most popular, with new positions being opened at each and buy-to-open activity detected.