Stock Analysis

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

  •  Updated
NasdaqGS:CVCO
Source: Shutterstock

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

earnings-and-revenue-growth
NasdaqGS:CVCO Earnings and Revenue Growth August 8th 2022

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.

Valuation is complex, but we're helping make it simple.

Find out whether Cavco Industries is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About NasdaqGS:CVCO

Cavco Industries

Cavco Industries, Inc. designs, produces, and retails manufactured homes primarily in the United States.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth0
Past Performance6
Financial Health6
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet with outstanding track record.