Cavco Industries, Inc. (CVCO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $566.19, Cavco Industries, Inc. (CVCO) is priced for today's economics sustained for ~6.1 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/CVCO

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 11.5% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Cavco builds factory-built housing, with home sales at about 92% of revenue and delivery and setup another 4%, and it runs a small insurance and lending arm alongside the plants that serves the same buyers and distributors.
• The order book is the tell to watch, since the FY2026 annual filing reports that "Our home order backlog at March 28, 2026 was approximately $195 million in wholesale sales values", roughly flat on the prior year, while the price is paying for years of compounding rather than a flat year.
• First-quarter results for fiscal 2027 are due July 30, 2026, and the balance sheet gives management room to wait, with $239.5 million of net cash against $13.5 million of gross borrowings.

Bull Case

This is a mature manufacturer, and mature manufacturers are normally read on where they sit in a cycle. Cavco does not read that way, and the reason is what it sells. A factory-built home is the cheapest new detached housing available in most American markets, which means the product competes hardest exactly when affordability is worst. The site-built industry shows the contrast in its own numbers: over the trailing year LEN saw revenue fall about 7%, DHI about 6% and KBH about 18%, while SKY, the nearest factory-built comparable, grew about 7%. Demand for the cheap end of housing does not disappear in a downturn. It relocates.

The operating economics are better than the sector's reputation suggests. Trailing operating margin runs about 10.9% on roughly $2.24 billion of revenue, which is above where the nearest direct comparable sits: SKY carries an operating margin near 9.5% on a slightly larger revenue base. That gap is small in isolation and meaningful in a business where the product is a commodity and the customer is price-driven. It comes from plant utilisation and from a distribution network that is genuinely spread, with the annual filing noting that "No independent distributor accounted for 10% or more of factory-built housing revenue during any fiscal year within the three-year period ended March 28, 2026." Nobody at the other end of the loading dock has leverage over the price.

The financial services arm is the piece most investors skip. It writes insurance for manufactured-home owners and originates loans against the homes the factories build, and it grew: "Financial services segment net revenue increased 5.8% primarily due to higher insurance premiums in the current year". Insurance premiums are recurring in a way home sales are not, and they arrive whether or not a given quarter's shipments do.

Then the balance sheet, which is close to unencumbered. Net cash of $239.5 million sits against gross borrowings of $13.5 million, so the interest bill is close to irrelevant next to operating profit. The board has been putting the surplus to work in its own shares: an extra $150 million was added to the repurchase authorisation announced on May 22, 2025, and a further $150 million was announced on May 21, 2026. It is also adding capacity, with a new manufacturing facility in El Mirage, Arizona announced on May 20, 2026. A company that can fund a plant and a repurchase programme out of operating cash flow, without borrowing for either, does not need the cycle to cooperate on any particular schedule.

Bear Case

Look at where the cash goes and the business gets more complicated than a factory. Cavco does not simply build homes and sell them to independent dealers. It guarantees the floor-plan loans those dealers use to hold inventory, agreeing to buy the homes back if a dealer defaults, an obligation the annual filing describes as running "generally 18 to 24 months" and reduced by the resale value of the repurchased homes. It also lends directly, providing "funds to purchase home inventory or homes for placement in" communities under its commercial loan programmes. And it originates consumer loans it cannot readily sell, stating plainly that "we have not securitized our loan originations as a means to obtain long-term funding". Each of those is defensible on its own. Together they mean the company carries part of its own channel's credit risk, and that risk arrives at the worst point of a housing cycle rather than a random one.

What the price asks for makes that matter. Near 17 times company-wide operating profit, the market is paying for operating profit to compound at the fastest rate the business can fund out of its own cash flow, roughly 25% a year, and to keep doing it for about six years. Of the comparable fast growers on record, only about 28% held a pace like that for even five and a half years. Note where the stretch is. The rate is inside what this company has recently delivered; the duration is what history rarely grants.

The order book is not currently arguing for six years of compounding. Backlog stood near $195 million in wholesale sales values at the end of fiscal 2026, down $2 million against the prior year, and the filing is careful to say why that figure should not be over-read: "until production of a particular home has commenced, we do not consider order backlog to be firm orders". A flat, soft-edged backlog is a normal thing for a manufacturer. It is a strange thing to find underneath a multiple that assumes several years of acceleration.

The valuation methods split sharply on this. The asset-value lenses put the price at more than twice where they land, and the earnings-power methods, which capitalise current profit without assuming growth, put it about 75% above them. Only the forward cash-flow methods land above the price, and they get there by projecting the recent growth rate forward for six years. That is not a disagreement about the company. It is a disagreement about how long good conditions last.

The concession the bear owes is a real one: this balance sheet cannot fail. Net cash covers every dollar of borrowing many times over, and the buyback authorisation is funded from operating cash rather than from debt. The bear case is not about survival. It is that a business earning about a 10.9% operating margin in a cyclical trade is being valued as though the next six years are already known.

Valuation

Today's price works out near 17 times the company's operating profit across all of its lines. Run that backwards and the assumption becomes visible: operating profit compounding at roughly 25% a year, the fastest pace the business can fund without outside capital, sustained for about six years. The rate is not the unusual part, since it sits inside what Cavco has recently produced. The persistence is. Of comparable fast growers, only about 28% kept that pace for five and a half years. The answer is also sensitive to what buyers demand: shift the required return by one point and the implied number of years moves by about 1.6.

The methods spread out from there. Only the forward cash-flow approaches land above the price, projecting recent growth ahead six years to get there. Peer multiples put the price about 17% above where they land. The earnings-power methods, which capitalise today's profit with no growth at all, sit about 75% below the price, and the asset-value lenses more than half below it. That shape is the signature of a durability premium: nothing static reaches the price, and the only frames that do are the ones allowed to assume the next several years look like the last few.

Against the sector the multiple is not the outlier the spread implies, sitting in the lower half of the peer multiple range. That is partly a comment on the peers. Homebuilders have been shrinking, with LEN and DHI both posting revenue declines over the trailing year, while the factory-built product has been taking share of the affordable end. A multiple in the lower half of a de-rating cohort is a weaker endorsement than it first appears.

Solvency barely needs a paragraph, which is itself the point. Net cash of $239.5 million sits against gross borrowings of $13.5 million, operating profit dwarfs the interest bill, and the trailing operating margin is about 10.9%. The filed inputs underneath all of that are unremarkable in a useful way: an order backlog near $195 million at fiscal year end, a distribution network in which no single independent distributor reached 10% of factory-built housing revenue in any of the last three years, and a financial services arm whose net revenue rose 5.8% on higher insurance premiums. The company is not fragile. The multiple simply has more of the future written into it than the backlog currently confirms.

Catalysts

Fiscal first-quarter results are due July 30, 2026, and they are the first read on the new year after fiscal 2026 closed on March 28. The prior report, released May 21, 2026, set the baseline the market is now extrapolating, including the order backlog near $195 million in wholesale sales values that was roughly flat year over year.

Capacity is the live strategic item. On May 20, 2026 the company announced a new manufacturing facility in El Mirage, Arizona. New plant capacity in a factory-built housing business is a multi-quarter commitment made against expected demand rather than booked demand, so the decision itself is management's clearest published statement about where it thinks volumes are heading. Watch whether the plant timeline and the backlog move in the same direction over the next two prints.

Capital return continues alongside it. The board authorised an additional $150 million for share repurchases on May 21, 2026, following an identical $150 million addition announced on May 22, 2025. Both were funded without borrowing, which is worth noting for a company whose gross debt is a rounding error. A proxy statement was also filed on June 16, 2026, the routine annual governance item rather than a signal.

Peer Cohorts (Per Segment, With Filing Citations)

Factory-built housing (reported)

• SKY (Champion Homes, Inc.)
• FY2025 10-K: …are presently available from a variety of sources and we are not dependent upon any single supplier. Prices of certain materials such as lumber, insulation, steel, and drywall can fluctuate significantly due to changes in demand and supply. We endeavor to mitigate the impact of supply chain challenges through…
• FY2025 10-K: MHI, in March 2025, there were 38 producers of manufactured homes in the U.S. operating an estimated 152 production facilities. For calendar 2024, the top three companies had a combined market share for HUD code homes of approximately 85%. We estimate that there were approximately 2,500 industry retail locations…
• LEN (LENNAR CORP /NEW/)
• FY2025 10-K: …rentals are very competitive industries, and competitive conditions could adversely affect our business or financial results. Homebuilding . The homebuilding industry is highly competitive. Homebuilders compete not only for homebuyers, but also for desirable land, financing, raw materials, skilled management and…
• FY2025 10-K: …in most of the states in which we have homebuilding operations. In fiscal year 2025, our financial services subsidiaries provided loans to 84% of our homebuyers who obtained mortgage financing in areas where we offered services. Because of the availability of mortgage loans from our financial services subsidiaries,…
• DHI (D.R. Horton, Inc.)
• FY2025 10-K: …company, financial services and other activities. Homebuilding is our core business, generating 92% of consolidated revenues of $34.3 billion and $36.8 billion in fiscal 2025 and 2024, respectively, and 90% of consolidated revenues of $35.5 billion in fiscal 2023. Most of our homebuilding revenue is generated from…
• FY2025 10-K: …more diverse opportunities to invest in our business and provide a strong platform for us to consolidate market share. 2 Table of Contents We conduct our homebuilding operations in the geographic regions, states and markets listed below. Our homebuilding operating divisions are aggregated into six reporting segments,…
• KBH (KB HOME)
• FY2025 10-K: …many of our served markets, which it periodically updates to incorporate value- engineering enhancements, regulatory requirements and/or evolving consumer tastes. Our library of standardized plans, which we have streamlined to focus on those most frequently selected by our customers, facilitates our ability to shift…
• FY2025 10-K: Notes to 32 Consolidated Financial Statements in this report. As a percentage of homebuilding revenues, our homebuilding operating income for 2025 decreased 290 basis points year over year to 8.2% , mainly due to a lower housing gross profit margin and higher selling, general and administrative expenses as a…
• TMHC (Taylor Morrison Home Corp)
• FY2025 10-K: …demand characteristics. We use furnished model homes as a marketing tool to demonstrate the advantages of our homes' designs, features and functionality, and to enhance the consumer experience. Depending upon the number of homes to be built in the project and the product lines to be offered, we generally build…
• FY2025 10-K: …our customer experience and acknowledges homeowners' suggestions to incorporate style, quality and sustainability into every community we develop. We offer a range of award-winning and innovative designs with a number of features such as single-story, multi-story, multi-family, higher density living, ranch style…
• MHO (M/I HOMES, INC.)
• FY2025 10-K: …features and benefits that satisfy the buyer's expectation for a better-built home, including a more eco-friendly and energy efficient home that we believe will save our customers up to 30% on their energy costs compared to a home that is built to minimum code requirements; (3) our onsite and online Design Studios…
• FY2025 10-K: …of construction to accommodate seasonal weather conditions. Our financial services operations also experience seasonality because their loan originations correspond with the delivery of homes in our homebuilding operations. Additionally, short-term volatility in the homebuilding industry and in the overall economy…

Financial services (reported)

• SKY (Champion Homes, Inc.)
• FY2025 10-K: …is included in net sales. Foreign Currency: Translation adjustments of the Company's international subsidiaries for which the local currency is the functional currency are reflected in the accompanying consolidated balance sheets as a component of accumulated other comprehensive income or loss. Fair Value: The…
• FY2025 10-K: …for each of the fiscal years in the periods ended March 29, 2025, March 30, 2024, and April 1, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements…
• DHI (D.R. Horton, Inc.)
• FY2025 10-K: …in fiscal 2025 and 2024, respectively. No impairment charges were recorded in the current or prior year. SG&A expense for fiscal 2025 and 2024 included charges of $7.3 million and $5.6 million, respectively, related to the shared services agreement between Forestar and D.R. Horton whereby D.R. Horton provides…
• FY2025 10-K: …financial entity. Changes in market conditions could result in a greater concentration of our mortgage sales in future periods to fewer financial entities and directly to Fannie Mae, Freddie Mac or Ginnie Mae, and we may need to make other adjustments to our mortgage operations. Financial Services Revenues and…
• LEN (LENNAR CORP /NEW/)
• FY2025 10-K: …in most of the states in which we have homebuilding operations. In fiscal year 2025, our financial services subsidiaries provided loans to 84% of our homebuyers who obtained mortgage financing in areas where we offered services. Because of the availability of mortgage loans from our financial services subsidiaries,…
• FY2025 10-K: 5, gross margin percentage of homes delivered decreased due to lower revenue per square foot and higher land costs year over year, partially offset by a decrease in construction costs. Financial Services Segment Our Financial Services reportable segment primarily provides mortgage financing, title and closing services…
• PHM (PULTEGROUP, INC.)
• FY2025 10-K: We conduct our Financial Services operations, which include mortgage banking, title, and insurance agency operations, through Pulte Mortgage and other subsidiaries. In originating mortgage loans, we initially use our own funds, including funds available pursuant to credit agreements with third parties. Substantially…
• FY2025 10-K: …and construction activities in our communities. Financial Services Operations We conduct our financial services business, which includes mortgage banking, title, and insurance agency operations, through Pulte Mortgage and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans…
• KBH (KB HOME)
• FY2025 10-K: …move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land. We also have one financial services reporting segment. The CODM reviews pretax income for our financial services segment…
• FY2025 10-K: …techniques. 65 Our financial instruments consist of cash and cash equivalents, corporate-owned life insurance, outstanding borrowings under the Credit Facility , if any, and the Term Loan , senior notes, and mortgages and land contracts due to land sellers and other loans. Fair value measurements of financial…
• TMHC (Taylor Morrison Home Corp)
• FY2025 10-K: …31, 2025, compared to 24.4% in the prior year. Adjusted home closings gross margin decreased 150 basis points to 23.0% for the year ended December 31, 2025, compared to 24.5% in the prior year. Home closings gross margin decreased in the East and Central regions primarily as a result of closing product mix. The East…
• FY2025 10-K: …From time to time we may enter into land or other asset sales that require recognition of revenue over time, however as of December 31, 2025, no such transactions have been material. Amenity and Other Revenue We own and operate certain amenities such as golf courses, club houses, and fitness centers, which require us…
• MHO (M/I HOMES, INC.)
• FY2025 10-K: …service make the homebuying process more efficient for our customers. Our financial services operations generate revenue primarily from originating and selling mortgages and collecting fees for title insurance and closing services. We offer mortgage banking services to our homebuyers through our 100%-owned…
• FY2025 10-K: …incentives that we offered to our homebuyers via our financial services operation. The operating income of our financial service operations increased $4.8 million in 2025 compared to 2024, which was primarily due to the increase in revenue discussed above, partially offset by a $4.5 million increase in selling,…
• TOL (Toll Brothers, Inc.)
• FY2025 10-K: …certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of October 31, 2025, we were in compliance with all such covenants and requirements on our term loan, credit facility and other loans payable. Refer to Note 5, "Loans Payable, Senior Notes, and Mortgage Company…
• FY2025 10-K: …on Schedule A hereto and The Bank of New York Mellon, as successor trustee. 4.51 Description of Certain of Registrant's Securities is hereby incorporated by reference to Exhibit 4.44 of the Registrant's Form 10-K for the year ended October 31, 2021. 10.1 Credit Agreement, dated as of February 14, 2023, by and among…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.