Thor Industries (NYSE:THO) RV Sales Increase Not Enough

While revenue for the latest quarter increased by 21 percent for Thor Industries (NYSE:THO), the cost of that growth was highlighted by the disappointing earnings they posted, which underscored the shrinking margins coming from lowered prices.

Prices had to be slashed so much that Thor misses earnings estimates by $0.10 a share, coming in at $0.44, down from analysts' expectations of $0.54.

When revenue increases that much at that high of a cost, the discounting had to be enormous to generate revenue.

The major question going forward is if Thor has any real control of their pricing, or if the macro-economic picture is the driver behind it.

What is very positive for the company is its no-debt and strong cash position. That gives them more flexibility than some of their competitors may have, allowing them to wait out the ongoing recession and still generate revenue, albeit at higher costs.

Soleil Securities lowered their EPS estimate on the company for full year 2011 from $2.56 to $2.45, and for full year 2012 from $3.00 to $2.90.

Thor plummeted Tuesday, closing at $29.53, falling $4.11, or 12.22 percent. Soleil has a price target on them of $50, dropping it from $51. They maintain a "Buy" rating on them.