Yahoo Finance Analysts Are Upgrading Cavco Industries, Inc. (NASDAQ:CVCO) After Its Latest Results
As you might know, Cavco Industries, Inc. (NASDAQ:CVCO) recently reported its annual numbers. It looks like the results were a bit of a negative overall. While revenues of US$1.1b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.1% to hit US$8.10 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Cavco Industries
Following the recent earnings report, the consensus from dual analysts covering Cavco Industries is for revenues of US$938.8m in 2021, implying an uneasy 12% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to dive 38% to US$5.06 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$865.9m and earnings per share (EPS) of US$4.67 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that the analysts have increased their price target for Cavco Industries 24% to US$212 on the back of these upgrades.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cavco Industries' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 12% revenue decline a notable change from historical growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cavco Industries is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Cavco Industries' earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Cavco Industries (at least 1 which is a bit unpleasant) , and understanding these should be part of your investment process.
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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. Thank you for reading.
