Need To Know: Analysts Are Much More Bullish On Cavco Industries, Inc. (NASDAQ:CVCO)

Shareholders in Cavco Industries, Inc. (NASDAQ:CVCO) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The stock price has risen 6.4% to US$274 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the latest consensus from Cavco Industries' three analysts is for revenues of US$2.3b in 2023, which would reflect a huge 20% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to dip 3.1% to US$25.09 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.9b and earnings per share (EPS) of US$21.16 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Cavco Industries

With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.2% to US$367 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Cavco Industries, with the most bullish analyst valuing it at US$385 and the most bearish at US$335 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Cavco Industries' rate of growth is expected to accelerate meaningfully, with the forecast 28% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 14% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Cavco Industries to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Cavco Industries.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Cavco Industries going out to 2024, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.