Cavco Industries, Inc. (CVCO): what the price requires
At today's price, Cavco Industries, Inc. (CVCO) is priced for today's economics sustained for ~5.3 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/CVCO
Headline
| Field | Value |
|---|---|
| Ticker | CVCO |
| Company | Cavco Industries, Inc. |
| Current price | $557.83/sh |
| Composition | Factory-built housing - Home sales 92% / Factory-built housing - Delivery, setup and other revenues 4% / Financial services - Insurance agency commissions received from third-party insurance companies 0% / Financial services - All other sources 4% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.2% |
| Operating margin today | 10.9% |
| Margin compression implied | -3.7pp |
| Must persist for | 5.3y |
| Multiple paid | 17x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 11.5% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.6 years.
Reconcile: at the x-ray's 9.3% required return this reads ~11.2%/yr; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.20σ |
| cohort percentile (of 212 peers) | 44 |
| sustained it ~5.3 years at this level | 29% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.03x | 5 | expensive |
| Earnings | 1.72x | 5 | expensive |
| Relative | 1.11x | 5 | expensive |
| Growth | 0.84x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $745.35 | 0.75x | yes | FCF base $0.2B, growth 11% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection |
| DCF Exit Multiple | Growth | $664.52 | 0.84x | yes | Exit EV/EBITDA: 14.7x / 16.7x / 18.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $445.79 | 1.25x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.0x / 18.0x / 21.0x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $261.06 | 2.14x | yes | BV/sh $139.80, ROE (TTM) 17.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $352.11 | 1.58x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $491.29 | 1.14x | yes | Rev $2.2B, growth 11% (input: historical growth; tapered), Terminal P/S: 1.6x / 2.0x / 2.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $503.45 | 1.11x | yes | EPS $23.98, growth 21% (input: historical EPS growth), PEG=1.10 (Fair) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $252.07 | 2.21x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.22B × (1−22%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $353.06 | 1.58x | yes | BV $139.80 + 5yr PV of (ROE (TTM) 17.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $274.64 | 2.03x | yes | √(22.5 × EPS $23.98 × BVPS $139.80) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $407.20 | 1.37x | yes | EBITDA $0.25B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $342.53 | 1.63x | yes | FCF $232.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $325.02 | 1.72x | yes | SBC-adj FCF $0.22B (FCF $0.23B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $773.75 | 0.72x | yes | EPS $23.98 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $67.23 | 8.30x | yes | BV $139.80 × (ROIC 4.4% / WACC 9.2%) |
| P/Sales Sector | Relative | $711.09 | 0.78x | yes | Revenue $2.24B × sector P/S 2.5x |
| PEG Fair Value | Relative | $755.17 | 0.74x | yes | EPS $23.98 × (PEG 1.5 × growth 21.0% (input: historical EPS growth)) → PE 31.5x |
| Earnings Yield | Earnings | $259.24 | 2.15x | yes | EPS $23.98 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $239.5m |
| Net debt / NOPAT (after-tax) | -1.28x (net cash) |
| Net debt / operating income (pre-tax) | -0.99x (net cash) |
| Interest coverage | 428.9x |
| Share count CAGR (buyback) | -4.0% |
| Burning cash | no |
Bullet Takeaways
The market is pricing roughly 11% annual operating growth for Cavco's factory-built housing segment over five years, and the fundamentals broadly back it: fiscal 2026 revenue rose 11.4% to $2.245 billion with record shipments of 20,842 homes.
The valuation is full but not extreme. Relative-multiple and growth-DCF methods justify the $602.77 price; asset-based and earnings-power methods say it is expensive.
The balance sheet is clean, about $239 million of net cash and a 17% return on equity, and management added a $150 million buyback. The risk is a cyclical housing market sensitive to interest rates and wholesale financing.
Bull Case
Start with what the market is pricing in, then check it against the business. At $602.77 the price embeds roughly 11% annual operating-profit growth for Cavco's factory-built housing segment over five years, a pace only about half of comparable fast-growers have sustained. That sounds demanding until you look at what Cavco just did: fiscal 2026 revenue rose 11.4% to $2.245 billion, diluted EPS reached $23.98 on net income of about $190 million, and the company achieved record annual shipments of 20,842 homes. The fundamentals are not lagging the price; they are matching the growth the price assumes. A business already delivering double-digit revenue growth and record volumes is not being asked to do something it has not shown.
The demand backdrop is structurally favorable. Manufactured housing is the most affordable form of new home ownership, and the United States has a persistent housing undersupply that affordability pressure only sharpens. Zoning reforms in several states are beginning to ease the regulatory barriers that historically limited factory-built homes, and Cavco has been working that angle directly, hosting Virginia's governor for manufactured-housing legislation. A surge in wholesale demand in March and April sharply increased backlogs and let Cavco run incremental production in facilities that had been below capacity, and the integration of American HomeStar added revenue and operating synergies above expectations.
The financial profile supports paying up for that growth. Cavco runs a clean balance sheet with about $239 million of net cash, a 17% return on equity, and a 23% gross margin, and management is allocating capital with confidence: it broke ground on a new high-capacity plant in El Mirage, Arizona, expanding its Southwest footprint, and added a $150 million share-repurchase authorization. The bull case is that Cavco is a debt-free, well-run leader in an affordable-housing category with secular tailwinds, and the price is paying for growth the company is actually delivering.
Bear Case
The governance and capital-allocation question is whether management is deploying cash aggressively into a cyclical peak. Cavco added a $150 million buyback and broke ground on a new high-capacity plant while the stock trades around 23x earnings, near the high end of its historical multiple. Buying back stock at a rich valuation and committing capital to new capacity are both bets that the current demand environment persists. If manufactured-housing demand is at a cyclical high rather than a new baseline, those decisions compound the downside: the company would be repurchasing shares at peak prices and adding capacity into softening demand, the classic capital-allocation trap for a cyclical at the top of its cycle.
The demand signal is already mixed, which is the deeper worry. While the company points to a March and April surge and a near-25% sequential backlog increase, the year-over-year picture is weaker: year-end backlog was $195 million, essentially flat with the prior year, and at least one analyst downgraded the stock from buy to hold citing declining backlog and worsening profitability despite rising revenue. A business whose revenue rises while backlog and margins soften is showing the early signs of a demand plateau, and the price is set for continued double-digit growth.
The end market is genuinely cyclical and rate-sensitive in ways the price does not fully discount. Manufactured-housing distributors finance their inventory through wholesale floor-plan financing from lending institutions, and the availability of that financing is significantly affected by lender conditions (FY2025 10-K, accession 0000278166-25-000057). When rates rise or lenders pull back, both the distributors' ability to stock homes and the end buyer's ability to finance a purchase contract at once, and Cavco's volumes fall. The bear case is that you are paying a full multiple for a cyclical housing manufacturer near what may be a demand peak, with management committing capital aggressively and the conservative methods pointing roughly 40% lower.
Valuation
Invert the price first. At $602.77 the factory-built housing segment that carries the priced-in premium implies operating growth of about 11.1% per year for five years, solved at an 11.6% cost of capital with 5% terminal growth. That is a within-range assumption, broadly consistent with what Cavco has recently delivered, but it is not a low bar: only about 52% of comparable fast-growers sustained that pace for five years. The read is rate-sensitive, with each one-point move in the cost of capital shifting the required growth by about 5.8 points.
The model families split along a clear line. Relative-multiple and growth-DCF methods justify the price, reflecting Cavco's growth and the peer multiples in homebuilding and building products. The asset-based and earnings-power methods say the stock is expensive, capitalizing book value and current earnings rather than the growth trajectory. The net-cash balance sheet and 17% return on equity are genuine quality markers, but they do not by themselves close the gap between the methods and the price.
The synthesis is that Cavco is priced as a growth compounder in a cyclical industry. If the housing-undersupply and zoning tailwinds keep volumes growing at the double-digit pace the price assumes, the relative and growth methods justify it and analyst targets near $575 to $600 are roughly in line. If demand is plateauing, as the flat year-over-year backlog and the recent downgrade suggest, the conservative methods near the $372 base are the honest anchor and the stock has meaningful downside. This is a cyclical priced at the optimistic end of its range, where the verdict turns on whether the recent record volumes are a new baseline or a cycle high.
Catalysts
The defining recent event was fiscal Q4 and full-year 2026 results reported May 22, 2026: Q4 revenue of $550 million, up 8%, with EPS of $5.42 beating the $5.22 estimate, and full-year revenue up 11.4% to $2.245 billion with diluted EPS of $23.98. Cavco achieved record annual shipments of 20,842 homes. The signal to watch most closely is backlog: it surged in March and April and rose nearly 25% sequentially, yet year-end backlog of $195 million was essentially flat year over year, and the tension between the recent surge and the flat annual figure is what will decide whether the growth thesis holds. Management also added a $150 million share-repurchase authorization.
Two structural catalysts are worth tracking. First, capacity: Cavco broke ground on a new high-capacity plant in El Mirage, Arizona, and the integration of American HomeStar is contributing revenue and operating synergies above expectations, so production capacity and acquisition synergies are near-term growth levers. Second, policy: manufactured housing benefits from housing-undersupply dynamics and from zoning reforms, and Cavco is actively engaged in advancing favorable legislation. On sentiment, the analyst view is constructive but the coverage is thin, with a small number of buy ratings and a median target near $587, and at least one recent downgrade to hold on backlog and margin concerns. The next earnings report, the trajectory of backlog and wholesale demand, and the direction of interest rates and wholesale floor-plan financing are the events most likely to move the thesis.
Sources: Cavco FY2026 Q4 and year-end results (StockTitan), Cavco lifts FY2026 earnings, adds $150M buyback (StockTitan), Cavco hosts Virginia governor for housing bills (StockTitan), CVCO forecast (MarketBeat).
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.
- 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.