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Cavco Industries (CVCO)
NASDAQ:CVCO
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Cavco Industries
(NASDAQ:CVCO)
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Rating:66Neutral
Price Target:
$569.00
▲(20.94% Upside)
Action:DowngradedDate:02/02/26
Score is driven by strong financial performance (especially the very low leverage balance sheet and solid cash generation) but is held back by very weak technicals (price below major moving averages and negative MACD). Earnings-call takeaways are mixed—credible synergy and buyback support offset by margin/earnings pressure and soft industry demand—while valuation appears mid-range.
Positive Factors
Balance Sheet Strength
Exceptionally low leverage (debt-to-equity ~0.03) gives Cavco durable financial flexibility. That conservatism supports acquisitions, buybacks, and capex during downcycles, reduces refinancing risk, and preserves investment capacity over the next several quarters.
Cash Generation and Free Cash Flow
Consistently strong operating cash and large free cash flow (FCF ≈$205M, ~86% of net income) underpin durable capital allocation choices. High cash conversion funds integration, share repurchases, and working capital needs, supporting resiliency across multi-quarter cycles.
High‑margin Financial Services
Financial services deliver outsized, stable margins (65.2%) and modest revenue growth, diversifying income away from cyclical home builds. This high-margin stream bolsters consolidated profitability and cash flow predictability over the medium term.
Negative Factors
Factory‑Built Margin Compression
A nearly 2 percentage-point decline in factory-built gross margin signals durable pressure from retail/wholesale price compression and input/tariff costs. Persisting margin erosion reduces operating leverage and limits earnings resilience as volumes fluctuate over coming quarters.
Industry Demand Softness / Volume Risk
Underlying volume weakness and lower HUD shipment trends show cyclical demand risk. Reduced shipments and lower plant utilization can persist for multiple quarters, pressuring revenue, fixed-cost absorption, and production planning across Cavco's dealer and community channels.
Higher SG&A and Acquisition Costs
Elevated SG&A driven by the Homestar acquisition and transaction expenses raises fixed overhead and compresses near-term margins. If integration-related costs and higher selling/admin spend persist, they will dampen operating leverage and cash flow improvement over subsequent quarters.
Cavco Industries (CVCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.65B
Dividend YieldN/A
Average Volume (3M)184.25K
Price to Earnings (P/E)26.9
Beta (1Y)0.89
Revenue Growth15.81%
EPS Growth37.89%
CountryUS
Employees6,500
SectorConsumer Cyclical
Sector Strength84
IndustryResidential Construction
Share Statistics
EPS (TTM)5.58
Shares Outstanding7,761,163
10 Day Avg. Volume164,976
30 Day Avg. Volume184,249
Financial Highlights & Ratios
PEG Ratio1.88
Price to Book (P/B)3.94
Price to Sales (P/S)2.08
P/FCF Ratio26.69
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue1.59
Enterprise Value/Gross Profit6.78
Enterprise Value/Ebitda14.63
Forecast
1Y Price Target
$575.00Price Target Upside22.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)25.02
Revenue Forecast (FY)$2.29B
Cavco Industries Business Overview & Revenue Model
Company DescriptionCavco Industries, Inc. designs, produces, and retails manufactured homes primarily in the United States. It operates in two segments, Factory-Built Housing and Financial Services. The company markets its manufactured homes under the Cavco, Fleetwood, Palm Harbor, Nationwide, Fairmont, Friendship, Chariot Eagle, Destiny, Commodore, Colony, Pennwest, R-Anell, Manorwood, and MidCountry brands. It also builds park model RVs; vacation cabins; and factory-built commercial structures, including apartment buildings, condominiums, hotels, workforce housing, schools, and housing for the United States military troops. In addition, the company produces various modular homes, which include single and multi-section ranch, split-level, and Cape Cod style homes, as well as two- and three-story homes, and multi-family units. Further, it provides conforming and non-conforming mortgages and home-only loans to purchasers of various brands of factory-built homes sold by company-owned retail stores, as well as various independent distributors, builders, communities, and developers. Additionally, the company offers property and casualty insurance to owners of manufactured homes. As of April 3, 2022, it operated 45 company-owned retail stores in Oregon, Arizona, Nevada, New Mexico, Texas, Indiana, Oklahoma, Florida, and New York. The company also distributes its homes through a network of independent distribution points in 48 states and Canada; and through planned community operators and residential developers. Cavco Industries, Inc. was founded in 1965 and is headquartered in Phoenix, Arizona.
How the Company Makes MoneyCavco makes money primarily by manufacturing and selling factory-built homes. The core revenue stream is home sales: Cavco builds manufactured and modular homes in its facilities and sells them at wholesale to independent dealers, builders/developers, and manufactured housing community operators, and also through its own retail stores; revenue is recognized from the sale of the home (and, where applicable, related components/options) based on contracted pricing and volume. A secondary revenue stream comes from financial services tied to the homes it sells. This includes (1) insurance: Cavco earns premiums and related fees/commissions from offering insurance products serving manufactured-home customers (e.g., home/contents or related coverage, where provided through its insurance operations), and (2) lending-related income: to the extent Cavco participates in financing programs (including loan sales/servicing or other lending support activities), it can earn interest income, fees, and/or gains associated with originated or facilitated loans; specific mix by product is not available here, so detailed breakdown is null. Additional revenue can come from selling parts/accessories and installation-related products used in the delivery and setup of homes, as well as from services provided to support dealers and customers. Key factors that influence earnings include production volume and plant utilization, pricing and product mix (home size, features, and customization), availability/cost of materials and freight, retail and dealer network strength, and demand drivers such as housing affordability, interest rates, and access to consumer financing.
Cavco Industries Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 21, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: revenue growth and integration progress from the American Homestar acquisition, meaningful synergy prospects (> $10M annualized) and strong financial services margin expansion were offset by declines in EPS and net income, gross margin compression in factory-built housing, higher SG&A and a higher tax rate driven by acquisition-related and phasing tax-credit effects. Management emphasizes backlog stability, operational readiness for spring demand and ongoing share repurchases, but near-term margin and volume headwinds (including tariffs and industry shipment softness in Oct–Nov) temper the outlook.Q3-2026 Updates
Positive Updates
Revenue Growth Driven by Acquisition
Consolidated net revenue of $581.0M, up $59.0M or 11.3% year-over-year; Factory-Built Housing revenue $558.5M, up $57.6M or 11.5% YoY. American Homestar contributed ~$42M sequentially to revenue.
Synergy Outlook from American Homestar Integration
Management now expects tangible, measurable annualized synergies above $10M, with roughly half (~$5M annualized) already in the run rate entering Q4; integration execution described as on-plan across HR, payroll, finance, IT and operations.
Share Repurchases and Capital Position
Continued buybacks of ~$44M during the quarter; ~$98M remaining under repurchase authorization. Unrestricted cash cited at $225M (Paul reported cash and restricted cash of $242.5M after a $157.5M decrease during the quarter).
Financial Services Margin Improvement
Financial Services gross margin increased to 65.2% from 55.5% year-over-year (+9.7 percentage points), primarily due to lower weather-related claims, rate increases and underwriting changes; Financial Services revenue up 6.2% YoY to $22.5M.
Average Selling Price and Product Mix
Average selling price (ASP) rose to about $107,000 in the quarter (sequential increase ~ $1,000), driven by higher proportion of company-owned store sales, more multi-section homes in mix, and product pricing increases.
Backlog Stability and Operational Positioning
Used about one week of backlog in the quarter and finished with 4–6 weeks of backlog; management reports backlogs stable and plants positioned to increase production if spring demand materializes.
Operational and Go-to-Market Progress
Company-wide rebranding and digital marketing improvements progressing (19 manufacturing brands consolidated under Cavco, new product line framework), intended to improve lead generation and retailer partnerships.
Cash Generation and Deal Funding
Cash provided by operating activities of $66.1M; cash used in investing activities $179.7M (primarily the American Homestar acquisition); acquisition closed and integration underway.
Negative Updates
Earnings and Profit Declines
Diluted EPS fell to $5.58 from $6.90 in prior-year quarter (-19.1%); net income decreased to $44.1M from $56.5M (-22.0%); pretax profit down 16.9% to $57.6M from $69.3M.
Gross Margin Compression — Factory-Built Housing
Consolidated gross margin down to 23.4% from 24.9% YoY (-1.5 percentage points); Factory-Built Housing gross profit margin 21.7% vs 23.6% prior year (-1.9 p.p.). Management cited retail/wholesale price compression in retail operations as a primary driver.
Volume Weakness in Base Business and Industry Slowdown
Excluding American Homestar, volume down ~4% YoY and down 6% sequentially. Industry HUD shipment data showed October and November down ~13% from calendar 2024 period; seasonally adjusted industry rates referenced falling from ~106k to ~96k (Oct) and ~93k (Nov).
Higher SG&A from Acquisition and One-Time Costs
SG&A increased to $81.4M (14.0% of revenue) from $66.0M (12.6% prior year), up $15.4M YoY; American Homestar added $6.9M in operating costs plus $2.9M in transaction-related expenses in the quarter.
Higher Effective Tax Rate
Effective tax rate rose to 23.5% from 18.6% YoY (+4.9 percentage points), driven by reduction in Energy Star tax credits and nondeductible deal costs (one-time impact noted).
Tariff and Input Cost Pressure
Management estimated tariffs and related input cost impacts of roughly $3.0M to COGS in the quarter and flagged uncertainty in projecting future pass-throughs as demand dynamics change.
Lower Interest Income and Mixed Loan Sales
Interest income dropped to $3.0M from $5.4M YoY due to lower cash balances post-acquisition; lending originations and loan sales have been weak recently though management expects improvement over coming quarters.
Channel Concentration and Community Channel Weakness
Most of the reduced volume came from community channel sales while retailers remained steady; regional variability noted (Southeast strengthened but most other regions declined), and communities can be volatile quarter-to-quarter.
Company Guidance
Management's guidance emphasized integration-driven cost savings and a cautious-but-optimistic operational stance: the American Homestar deal now yields tangible, measurable synergies of more than $10 million annually with roughly half (≈$5M annual run‑rate) already in place entering Q4 (Allison noted that equates to roughly a $1.25M Q4 P&L uplift if the $5M is annualized), integration costs should decline going forward, and additional strategic benefits (product/plant optimization, company‑store fill‑ins) are expected but not quantified; they reiterated they will continue share buybacks (Q3 repurchases $44M; ~$98M authorization remaining) while preserving liquidity (unrestricted cash ≈$225M; cash & restricted ≈$242.5M), keep production rates steady to stay positioned for spring (used ~1 week of backlog in Q3, ending backlog ~4–6 weeks), and called out key Q3 metrics to frame guidance: net revenue $581M (Factory‑Built $558.5M; Financial Services $22.5M), consolidated gross margin 23.4% (Factory‑Built 21.7%; Financial Services 65.2%), SG&A $81.4M (14% of revenue), pretax profit $57.6M, EPS $5.58, a Q3 tax rate of 23.5% (management suggested subtracting ~1% of nonrecurring items for modeling), ASP ≈$107k (up ≈$1k sequential, aided by Homestar), and a Q3 tariff impact to COGS of roughly $3M.Cavco Industries Financial Statement Overview
Summary
Strong overall fundamentals supported by an exceptionally conservative balance sheet (very low leverage and solid ROE), solid profitability (TTM gross margin ~24%, net margin ~9%), and healthy free cash flow. Offsetting factors are cyclical revenue/margin variability and some cash-flow inconsistency typical for the sector.Income Statement
CVCO shows solid profitability with TTM (Trailing-Twelve-Months) gross margin around 24% and net margin near 9%, indicating healthy pricing and cost control for a cyclical homebuilding-related business. Revenue has re-accelerated in TTM (Trailing-Twelve-Months) (about 3% growth) after a prior annual decline in 2024, but the multi-year pattern is choppy: strong growth in 2022–2023 followed by a pullback, and margins have come off the 2022–2023 highs. Overall: profitable and resilient, but with clear cyclicality and some margin compression versus peak years.78
Positive
Balance Sheet
The balance sheet is a major strength: leverage is extremely low (TTM (Trailing-Twelve-Months) debt-to-equity ~0.03), providing substantial flexibility if demand weakens. Equity has grown over time, and returns on equity remain strong (TTM (Trailing-Twelve-Months) ~18%), even though below the very strong 2022–2023 levels. Key watch-out is not leverage but the cyclical nature of the industry, which can pressure returns in downcycles.93
Very Positive
Cash Flow
Cash generation is healthy, with TTM (Trailing-Twelve-Months) operating cash flow (~$239M) and free cash flow (~$205M) both solid and free cash flow up strongly versus the prior period (TTM (Trailing-Twelve-Months) growth ~14%). Free cash flow is high relative to earnings (about 86% of net income in TTM (Trailing-Twelve-Months)), supporting earnings quality. However, operating cash flow has been somewhat inconsistent year-to-year (including a weaker annual 2025 versus 2024), which is typical for the sector but still a volatility risk.74
Positive
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.20B | 2.02B | 1.79B | 2.14B | 1.63B | 1.11B |
| Gross Profit | 515.95M | 465.59M | 426.90M | 554.93M | 408.75M | 238.98M |
| EBITDA | 239.13M | 230.85M | 219.35M | 324.58M | 223.71M | 103.97M |
| Net Income | 184.42M | 171.04M | 157.82M | 240.55M | 197.70M | 76.65M |
Balance Sheet | ||||||
| Total Assets | 1.47B | 1.41B | 1.35B | 1.31B | 1.15B | 1.15B |
| Cash, Cash Equivalents and Short-Term Investments | 259.16M | 376.07M | 370.96M | 286.40M | 264.24M | 264.24M |
| Total Debt | 68.13M | 45.14M | 35.15M | 36.56M | 24.78M | 24.78M |
| Total Liabilities | 382.98M | 342.06M | 320.75M | 330.47M | 323.69M | 323.69M |
| Stockholders Equity | 1.09B | 1.06B | 1.03B | 976.29M | 830.46M | 830.46M |
Cash Flow | ||||||
| Free Cash Flow | 205.26M | 157.07M | 207.26M | 211.59M | 125.57M | 125.57M |
| Operating Cash Flow | 238.76M | 178.50M | 224.68M | 255.69M | 144.22M | 144.22M |
| Investing Cash Flow | -209.83M | -23.95M | -31.71M | -129.34M | -159.10M | -159.10M |
| Financing Cash Flow | -165.09M | -147.95M | -107.71M | -102.20M | -65.09M | -65.09M |
Cavco Industries Technical Analysis
Negative
470.47
Price Trends
581.15
Negative
578.86
Negative
531.76
Negative
Market Momentum
-25.69
Positive
28.08
Positive
8.90
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CVCO, the sentiment is Negative. The current price of 470.47 is below the 20-day moving average (MA) of 541.47, below the 50-day MA of 581.15, and below the 200-day MA of 531.76, indicating a bearish trend. The MACD of -25.69 indicates Positive momentum. The RSI at 28.08 is Positive, neither overbought nor oversold. The STOCH value of 8.90 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CVCO.
Cavco Industries Risk Analysis
Cavco Industries disclosed 36 risk factors in its most recent earnings report. Cavco Industries reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cavco Industries Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $2.72B | 8.76 | 17.70% | ― | 6.62% | -1.90% | |
74 Outperform | $4.08B | 22.24 | 13.58% | ― | 12.14% | 48.68% | |
71 Outperform | $3.17B | 8.49 | 12.99% | ― | 4.77% | -9.30% | |
70 Outperform | $3.32B | 10.16 | 10.80% | 1.76% | -10.01% | -27.81% | |
69 Neutral | $3.97B | 11.14 | 7.29% | ― | -16.60% | -29.85% | |
66 Neutral | $3.65B | 26.87 | 17.14% | ― | 15.81% | 37.89% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
CVCO
Cavco Industries
470.47
-51.01
-9.78%
KBH
KB Home
52.50
-7.73
-12.83%
MHO
M/I Homes
122.87
5.14
4.37%
SKY
Champion Homes
73.85
-21.09
-22.21%
TPH
Tri Pointe
46.60
14.63
45.76%
GRBK
Green Brick Partners
62.93
4.30
7.33%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.