SKY - Skyline Champion: Weak Housing Demand And A Lack Of Margin Of Safety In Share Price

2024-04-20 04:22:14 ET

Summary

• Skyline Champion specializes in factory-built housing and has demonstrated strong revenue growth and margin expansion over the last two years.
• However, the housing market is showing signs of weakness in FY2023, as volume was flat year-over-year in the US while Canada was down double digits.
• In 3Q24, revenue fell in the low single digits, but it was an improvement compared to the previous two quarters.
• The uncertainty in the Fed's rate cut timing and aging homes may create tailwinds for Skyline Champion in the longer term.
• However, I am recommending a hold rating as its share price lacks a margin of safety.

Synopsis

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