Thor Industries' (THO 1.96%) stock price had been up as high as 60% in 2021 before returns evaporated in recent months. Now, the recreational vehicle specialist's shares are trailing the market as it heads into its fiscal 2022 first-quarter earnings report on Wednesday, Dec. 8.

The RV giant will update investors on sales and profit trends, but the biggest question ahead of the announcement is how well Thor and peers like Winnebago (WGO 2.23%) are handling the historic supply and inventory challenges today.

Success on this score could set Thor up for a fantastic 2022 ahead as it fulfills existing orders from dealers at rising prices. Stumbles, on the other hand, would pressure growth or leave the company exposed to major write-downs in a slowing market.

Four people sitting under the awning of an RV.

Image source: Getty Images.

Demand wins

The good news is that investors are likely to see more evidence of strong sales momentum. Thor said back in September that there wasn't a hint of a demand slowdown on the books. That high demand met with unusually low inventory at dealerships to create a record backlog level of roughly $17 billion.

Sure, that backlog simply represents orders that could be canceled. But it's still great news for the business to see backlog that surpasses the previous year's revenue. "Demand for our RV products remains very robust," CEO Bob Martin told investors in late September.

Questions about supply

The murky part of the picture is around supply. Thor said it couldn't produce enough RVs in late fiscal 2021, and those problems might have grown as supply chain issues became worse in recent months.

Ideally, Thor's manufacturing network ramped up its volume enough to help dealerships build up their inventory levels. If the company struggled, on the other hand, investors might see another big boost to the company's backlog even as sales were constrained in the current quarter. A large backlog is usually great news, but Thor will need to show that it can start turning more of those likely sales into actual sales.

The new outlook

Investors will also get a key update on management's growth forecast now that fiscal 2022 is well underway. Back in September, Thor cited several challenges to the short-term outlook, including a tight labor market and supply chain issues. The company should handle those problems without too much disruption, though, it predicted. We'll learn whether Thor is still on that optimistic growth and earnings track this week.

Executives might also explain whether they still see the RV industry growing by about 4% in 2022, which would likely power another record year of profits and sales for Thor. But again, that bullish reading hinges on the company's ability to ramp up production and capitalize on today's strong demand. Those demand trends can change quickly. It is a consumer discretionary industry, after all.

That factor helps explain why Thor and its peers are working hard to deliver motor homes and towable RV products to dealerships right now rather than simply taking orders for future deliveries. This week's report will show how well Thor is handling that challenge.