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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:
$623.00
▲(7.92% 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
Conservative balance sheet
Cavco's exceptionally low leverage (TTM debt/equity ~0.03) provides durable financial flexibility to fund operations, acquisitions and buybacks without stressing liquidity. Coupled with ~18% ROE, this supports resilient capital allocation and downside protection through housing cycles.
Strong free cash flow generation
High operating and free cash flow, with FCF near 86% of net income, indicates quality earnings and strong cash conversion. This durable cash generation funds share repurchases, acquisition integration and capex, underpinning long-term financial stability despite sector's year-to-year volatility.
Tangible acquisition synergies (American Homestar)
The American Homestar deal is delivering measurable, recurring synergies (> $10M annualized, ~$5M already realized). Structural benefits—product/plant optimization, company-store fill‑ins and cost savings—should sustainably improve margins and scale economics if integration execution remains on plan.
Negative Factors
Factory-built margin compression
Factory-built gross margin has declined materially year-over-year, reflecting retail/wholesale price compression and higher input/tariff costs. These structural margin headwinds reduce operating leverage and could keep profitability below prior peaks absent sustained productivity gains or pricing power improvements.
Industry volume weakness
Underlying demand softening and lower HUD shipments reduce plant utilization and revenue visibility. As a cyclical residential-construction player, prolonged weak shipments or regional softness can constrain margin recovery and limit the payoff period for recent investments and integration benefits.
Higher SG&A and integration costs
Elevated SG&A from acquisition-related costs and higher effective tax rate compress near-term operating income. Until synergies fully offset these recurring and one-time expenses, elevated overhead and tax headwinds will limit margin expansion and free-cash-flow upside despite strong balance-sheet support.
Cavco Industries (CVCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.48B
Dividend YieldN/A
Average Volume (3M)218.34K
Price to Earnings (P/E)25.1
Beta (1Y)0.84
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. Volume169,348
30 Day Avg. Volume218,340
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 Cap0.97
Enterprise Value/Revenue1.97
Enterprise Value/Gross Profit8.40
Enterprise Value/Ebitda18.11
Forecast
1Y Price Target
$575.00Price Target Upside-0.39% Downside
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 Industries generates revenue primarily through the sale of manufactured and modular homes, which includes both single-section and multi-section homes. The company has several key revenue streams, including home sales, the sale of related products such as home accessories and components, and the production of park model RVs. Additionally, Cavco earns income from its financial services segment, which offers retail and wholesale financing for home purchases. Significant partnerships with land developers and retailers also contribute to its earnings by expanding its market reach and facilitating the sale of homes. The company's focus on affordable housing solutions positions it well to capitalize on market demand, particularly in areas with growing populations and housing shortages.
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
577.26
Price Trends
602.61
Negative
580.31
Negative
529.13
Positive
Market Momentum
-4.59
Negative
47.87
Neutral
40.11
Neutral
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 577.26 is above the 20-day moving average (MA) of 555.63, below the 50-day MA of 602.61, and above the 200-day MA of 529.13, indicating a neutral trend. The MACD of -4.59 indicates Negative momentum. The RSI at 47.87 is Neutral, neither overbought nor oversold. The STOCH value of 40.11 is Neutral, 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 | $3.18B | 10.41 | 17.98% | ― | 6.62% | -1.90% | |
71 Outperform | $3.66B | 9.67 | 13.20% | ― | 4.77% | -9.30% | |
71 Outperform | $5.17B | 24.94 | 13.69% | ― | 12.14% | 48.68% | |
70 Outperform | $4.02B | 10.33 | 10.70% | 1.76% | -10.01% | -27.81% | |
69 Neutral | $3.91B | 17.04 | 7.25% | ― | -16.60% | -29.85% | |
66 Neutral | $4.48B | 25.06 | 17.18% | ― | 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
577.26
58.84
11.35%
KBH
KB Home
63.58
4.75
8.07%
MHO
M/I Homes
142.16
27.48
23.96%
SKY
Champion Homes
93.48
-6.48
-6.48%
TPH
Tri Pointe
46.30
15.34
49.55%
GRBK
Green Brick Partners
73.66
15.05
25.68%
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.