IBD Stock Analysis
- Relative strength line right at record highs
- Undercuts 50-day line, will have 66.92 flat-base buy point soon
- Could have slightly lower entry from downward-sloping trend line
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:07PM EDT on
Homebuilder Skyline Champion (SKY) is the IBD Stock Of The Day, as record-high housing costs spur sales of more moderately priced homes. SKY stock has been trading tightly, but fell below key support on Thursday.
The Troy, Mich.-based company’s 40 manufacturing facilities throughout the U.S. and western Canada produce a wide variety of manufactured and modular homes.
Skyline’s modular buildings serve the single-family, multifamily, hospitality, senior and workforce housing sectors. The bulk of its revenue in recent years comes from U.S. factory-built housing, with a smaller focus on RVs.
“Our homebuilding demand is even more accelerated because of new financing solutions we’ve seen come to bear for our products and services, as well as just the affordable price point nature of our homes,” said CEO Mark Yost at a Sept. 9 RBC Global Industrials Conference.
Skyline earnings shot up 241% in its fiscal Q3 vs. a year earlier. Sales also popped 87% to $510 million.
U.S. factory-built homes sold increased 58% to 6,372. Total backlog increased by more than 500% to $1.2 billion as of July 3, 2021, vs. $192.1 million as of June 27, 2020.
Skyline homes’ average selling prices jumped 16.2% to $71,800, due to price increases in response to rising materials costs, the company said in a statement.
Meanwhile, Skyline’s gross profit margin expanded 210 basis points to 22%.
“The increase in the gross profit margin was driven by higher sales growth due to higher volume and operating efficiencies that were able to offset the margin erosion from material inflation,” the company said.
Skyline shares fell 5.1% to 60.06 on the stock market today. SKY stock is not flashing any buy signals right now, but it showing several bullish signs in a weak market.
Shares have been trading very tightly on a weekly chart, according to MarketSmith chart analysis. But SKY stock undercut its 50-day line and 10-week line on Thursday. SKY stock is poised to complete a flat base after this week with a 66.92 buy point. But drawing a trend line on a daily or weekly chart yields an early entry.
Skyline’s relative strength line is right at record highs, trending higher since April 2020.
Its RS Rating is 95 out of a possible 99. SKY stock boasts a best-possible EPS Rating of 99, as it’s posted three straight quarters of stellar earnings growth. With a Composite Rating of 97, Skyline ranks No. 1 in IBD’s building-mobile/manufacturing & RV industry group.
Phoenix-based manufactured-homes builder Cavco (CVCO), ranked No. 3, was down 3.4%.
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