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Brokers Are Upgrading Their Views On Cavco Industries, Inc. (NASDAQ:CVCO) With These New Forecasts

·3 min read

Cavco Industries, Inc. (NASDAQ:CVCO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory 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 6.4% over the past week, closing at US$274. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After the upgrade, the three analysts covering Cavco Industries are now predicting revenues of US$2.3b in 2023. If met, this would reflect a huge 20% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to reduce 3.1% to US$25.09 in the same period. Prior to this update, the analysts had been forecasting revenues of US$1.9b and earnings per share (EPS) of US$21.16 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Cavco Industries

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earnings-and-revenue-growth

It will come as no surprise to learn that the analysts have increased their price target for Cavco Industries 8.2% to US$367 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. The most optimistic Cavco Industries analyst has a price target of US$385 per share, while the most pessimistic values it at US$335. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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. It's clear from the latest estimates that Cavco Industries' rate of growth is expected to accelerate meaningfully, with the forecast 28% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 14% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Cavco Industries 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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Cavco Industries.

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 Cavco Industries going out to 2024, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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