Skyline Champion Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Skyline Champion Corporation (NYSE:SKY) shareholders, because the company has just released its latest second-quarter results, and the shares gained 3.4% to US$26.78. It looks like a credible result overall - although revenues of US$322m were what the analysts expected, Skyline Champion surprised by delivering a (statutory) profit of US$0.31 per share, an impressive 41% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Skyline Champion

Following last week's earnings report, Skyline Champion's five analysts are forecasting 2021 revenues to be US$1.24b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 9.3% to US$0.84 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.24b and earnings per share (EPS) of US$0.84 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 15% to US$32.33. It looks as though they previously had some doubts over whether the business would live up to their expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Skyline Champion at US$37.00 per share, while the most bearish prices it at US$26.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Skyline Champion's revenue growth is expected to slow, with forecast 0.2% increase next year well below the historical 7.5%p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.5% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Skyline Champion.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Skyline Champion's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Skyline Champion analysts - going out to 2024, and you can see them free on our platform here.

We also provide an overview of the Skyline Champion Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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