Is Now The Time To Look At Buying Skyline Champion Corporation (NYSE:SKY)?

Skyline Champion Corporation (NYSE:SKY), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Skyline Champion’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Skyline Champion

What's The Opportunity In Skyline Champion?

According to my valuation model, Skyline Champion seems to be fairly priced at around 9.2% below my intrinsic value, which means if you buy Skyline Champion today, you’d be paying a fair price for it. And if you believe that the stock is really worth $68.60, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Skyline Champion’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Skyline Champion?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Skyline Champion, at least in the near future.

What This Means For You

Are you a shareholder? SKY seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on SKY for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on SKY should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Skyline Champion at this point in time. For example, Skyline Champion has 2 warning signs (and 1 which is significant) we think you should know about.

If you are no longer interested in Skyline Champion, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.