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Skyline Champion Corporation (NYSE:SKY) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 5.7% over the past week, closing at US$59.62. Could this big upgrade push the stock even higher?
Following the upgrade, the current consensus from Skyline Champion's four analysts is for revenues of US$2.0b in 2022 which - if met - would reflect a solid 19% increase on its sales over the past 12 months. Statutory earnings per share are presumed to soar 30% to US$2.67. Previously, the analysts had been modelling revenues of US$1.7b and earnings per share (EPS) of US$1.63 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
It will come as no surprise to learn that the analysts have increased their price target for Skyline Champion 23% to US$68.17 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Skyline Champion at US$83.00 per share, while the most bearish prices it at US$49.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Skyline Champion shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Skyline Champion's growth to accelerate, with the forecast 25% annualised growth to the end of 2022 ranking favourably alongside historical growth of 5.3% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Skyline Champion is expected to grow much faster than its 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. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Skyline Champion could be worth investigating further.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Skyline Champion going out to 2023, 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.
This article by Simply Wall St is general in nature. 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.
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