Critical Review: Thor Industries (THO) and KB Home (KBH)

Thor Industries (NYSE: THO) and KB Home (NYSE:KBH) are both mid-cap construction companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Valuation and Earnings

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This table compares Thor Industries and KB Home’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Thor Industries $7.25 billion 0.84 $374.25 million $7.09 16.24
KB Home $4.37 billion 0.57 $180.59 million $1.85 15.38

Thor Industries has higher revenue and earnings than KB Home. KB Home is trading at a lower price-to-earnings ratio than Thor Industries, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Thor Industries has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, KB Home has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500.

Insider and Institutional Ownership

86.0% of Thor Industries shares are held by institutional investors. Comparatively, 95.7% of KB Home shares are held by institutional investors. 6.6% of Thor Industries shares are held by insiders. Comparatively, 8.6% of KB Home shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Thor Industries and KB Home’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Thor Industries 5.38% 28.42% 17.41%
KB Home 2.15% 11.16% 4.11%

Analyst Ratings

This is a summary of recent recommendations and price targets for Thor Industries and KB Home, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Thor Industries 1 3 7 0 2.55
KB Home 5 10 1 0 1.75

Thor Industries presently has a consensus price target of $130.00, indicating a potential upside of 12.88%. KB Home has a consensus price target of $29.43, indicating a potential upside of 3.44%. Given Thor Industries’ stronger consensus rating and higher possible upside, equities analysts clearly believe Thor Industries is more favorable than KB Home.

Dividends

Thor Industries pays an annual dividend of $1.48 per share and has a dividend yield of 1.3%. KB Home pays an annual dividend of $0.10 per share and has a dividend yield of 0.4%. Thor Industries pays out 20.9% of its earnings in the form of a dividend. KB Home pays out 5.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Thor Industries has increased its dividend for 8 consecutive years. Thor Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Thor Industries beats KB Home on 13 of the 17 factors compared between the two stocks.

Thor Industries Company Profile

Thor Industries, Inc., through its subsidiaries, designs, manufactures, and sells recreational vehicles, and related parts and accessories primarily in the United States and Canada. It operates through Towable Recreational Vehicles and Motorized Recreational Vehicles segments. The company offers travel trailers under the Airstream Classic, International, Tommy Bahama, Flying Cloud, Sport, and Basecamp trade names, as well as Interstate series of Class B motorhomes; gasoline and diesel Class A and Class C motorhomes under the Four Winds, Hurricane, Chateau, Windsport, Axis, Vegas, Tuscany, Palazzo, Aria, Quantum, Compass, Gemini, A.C.E., Alante, Precept, Greyhawk, and Redhawk trade names; and luxury Class A motorhomes under Insignia, Aspire, Anthem, and Cornerstone trade names. It also provides conventional travel trailers and fifth wheels under the Montana, Springdale, Hideout, Sprinter, Outback, Laredo, Bullet, Fuzion, Raptor, Passport, Cougar, Coleman, Kodiak, Aspen Trail, Aerolite, Voltage, Cruiser, Volante, Sunset Trail, Zinger, Landmark, Bighorn, Elkridge, Trail Runner, North Trail, Cyclone, Torque, Prowler, Wilderness, Shadow Cruiser, Fun Finder, MPG, Radiance, Stryker, Sportsmen, Spree, Venom, Durango, SportTrek, Connect, Sportster, Sonic, Jay Flight, Jay Feather, Eagle, Pinnacle, Seismic, Launch, Autumn Ridge, Solstice, Highlander, Mesa Ridge, and Open Range trade names; and luxury fifth wheels under the Redwood and DRV Mobile Suites trade names. In addition, the company offers equestrian recreational vehicle products with living quarters under trade names, such as Premiere, Silverado, Ranger, Laredo, Trail Boss, and Trail Hand; and lightweight travel trailers and specialty products under Camplite and Quicksilver trade names. Further, it provides aluminum extrusion and specialized component products. The company markets its recreational vehicles through independent dealers. Thor Industries, Inc. was founded in 1980 and is based in Elkhart, Indiana.

KB Home Company Profile

KB HOME is a homebuilding company. The Company is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. It operates through five segments, which consist of four homebuilding segments and one financial services segment. Its homebuilding segments include West Coast, Southwest, Central and Southeast. The homebuilding segments are engaged in the acquisition and development of land primarily for residential purposes. The financial services segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to its homebuyers in the same markets as its homebuilding segments, and provides title services in the majority of markets located within its Central and Southeast homebuilding segments. It offers homes in development communities, at urban in-fill locations and as part of mixed-use projects.

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