Champion Homes, Inc. (SKY): what the price assumes

In the published model solve dated 2026-Q2, anchored at $91.48, Champion Homes, Inc. (SKY) is priced for today's economics sustained for ~8.0 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 2026-07-11.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/SKY

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 12.9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.

Reconcile: at the x-ray's 9.3% required return this reads ~12.5%/yr; the models below use their own rates.

How unusual the bet is: elevated

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, Relative

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=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

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Champion Homes builds factory-made housing and increasingly sells it through its own retail lots (roughly 62% manufacturing, 37% retail), growing fiscal 2026 sales 7.3% to $2.7 billion on pricing, mix, and the Iseman Homes acquisition, with its 10-K citing demand from "newly built affordable, single-family housing" (accession 0001193125-26-239333).

• The biggest risk is duration: today's price needs operating growth held near the company's self-funding pace for about five years, while unit volumes just fell 2.6% and backlog dropped 15.1% sequentially in the December quarter.

• Watch whether gross margin holds the mid-20s band it guided to and whether backlog stabilizes at the next quarterly print; $614 million of net cash and a refreshed $150 million buyback give management room to act either way.

Bull Case

The valuation methods split on Champion Homes in an unusually clean way, and the split is the bull case. At $81.27 (July 2026), the approaches that credit forward growth sit comfortably above the price: a standard cash-flow projection lands well past it, and sector revenue multiples read the stock as inexpensive. The approaches that only credit the balance sheet as it stands today land near half the price. That gap is the market betting the next five years of factory-built housing do not look like the last housing cycle, and the operating evidence has been backing the bet. Fiscal 2026 net sales grew 7.3% to $2.7 billion with net income up 4.3% to $206.9 million, and the company's own 10-K frames the demand engine plainly: "The need for newly built affordable, single-family housing has continued to drive demand for new homes" (FY2026 10-K, accession 0001193125-26-239333).

The affordability mechanic is what makes the growth story structural rather than cyclical. Champion sells a new single-family home at an average price near $99,300 (up 4.6% in the December quarter on a mix shift toward multi-section units), a price point site builders largely cannot reach. The business is also becoming more vertically integrated: manufacturing is about 62% of the revenue mix and company-owned retail about 37%, and the retail arm captures the full selling price of homes the factories build, as the 10-K describes: "Revenue from Company-owned retail sales centers includes the selling price of homes internally manufactured" (accession 0001193125-26-239333). The May 2025 acquisition of Iseman Homes extended that captive retail footprint, and the filing notes acquisitions are already folded into results: "These acquisitions and investments are included in the Company's consolidated results for periods subsequent to their respective acquisition dates" (accession 0001193125-26-239333). Owning the sales channel means the margin on distribution stays in house and the company sees demand shifts at the counter, not through a dealer's order book.

The balance sheet turns that operating position into optionality. Champion carries about $614 million of net cash against a trivial $24 million of gross debt, generates roughly $270 million of free cash flow, and is not burning anything. Management's read on where that cash should go is visible in the share count: $200 million of stock repurchased in fiscal 2026, $50 million of it in the fourth quarter, with the board refreshing a $150 million authorization in May 2026. A debt-free manufacturer buying back shares while funding capacity from its own cash flow does not need capital markets to cooperate. If manufactured housing keeps taking share of entry-level demand, Champion compounds without asking anyone's permission.

Bear Case

Champion does not get to enjoy its affordability niche alone. Cavco Industries runs the same factory-built playbook nationwide, and the 10-K is blunt about how crowded the arena is: "We compete with the other producers of manufactured homes, as well as companies selling homes repossessed from wholesalers or consumers. In addition, manufactured homes compete with new and existing site-built homes, as well as apartments, townhouses, and condominiums" (FY2026 10-K, accession 0001193125-26-239333). The last clause is the dangerous one. When site builders sit on unsold inventory, they buy down mortgage rates and compress the price gap that is Champion's entire pitch. The filing concedes the exposure in its risk factors: "our competitors' products may obtain better market acceptance despite our efforts to lead the market" (accession 0001193125-26-239333).

The recent quarters show the demand engine sputtering under the surface of the revenue line. In the December quarter, U.S. homes sold fell 2.6% while average selling price rose 4.6%, gross margin gave up 190 basis points to 26.2%, and backlog dropped 15.1% sequentially to $266 million. Fourth-quarter net income fell 18.4% to $29.7 million. Pricing is doing the work volume used to do, and pricing has a ceiling in a product whose whole reason to exist is being cheap. Demand is also hostage to financing terms Champion does not control; the regulatory frame around its buyers' loans is thick enough that the 10-K walks through it: "Federal laws permit manufactured housing retailers to assist home buyers with securing financing for the purchase of homes" (accession 0001193125-26-239333), and a buyer priced on a chattel loan feels every move in rates before Champion sees the cancellation.

Now connect that to what the price requires. At roughly 13 times operating income, today's price only works if operating growth holds near the fastest pace the business can fund from its own cash flow for about five more years. The near-term rate is within what Champion has recently delivered; the stretch is the duration. Historically, only about 29% of comparable fast-growers sustained that pace for that long. If growth mean-reverts to a normal housing cadence, the multiple the price can support compresses toward what the steady-state readings already say: the earnings-power view puts the price about 30% above what current profits defend, and the book-value-plus-profitability view puts it about 70% above. A cyclical manufacturer with softening volumes, shrinking backlog, and a five-year growth requirement is a bet on duration that housing cycles rarely grant.

Valuation

Start with what $81.27 is actually buying. The market is paying about 13 times company-wide operating income, and unwinding that price into an assumption, it embeds operating growth held near the company's self-funding ceiling for roughly five years. The rate itself is not exotic; Champion has recently grown at that kind of pace, and fiscal 2026 delivered 7.3% sales growth. The unusual part is the persistence: of comparable companies growing this fast, only about 29% kept it up for the roughly five and a half years the price assumes. One measurement note belongs here: that multiple prices the trailing operating income the framework carries (about $289 million), while the latest EDGAR quarterly tally reads closer to $252 million, a gap of about 15% between two legitimate measurement bases.

The pattern across method families says precisely what kind of bet this is. The forward-growth approaches justify the price with room to spare; the price sits about 25% below where the cash-flow projections land. Peer multiples nearly reach it, with the price about 12% above the sector-multiple read. The steady-state views do not get there: the price sits roughly 30% above what earnings power alone defends and over 70% above the book-value-plus-profitability reading. When only the growth-crediting methods reach the price, the premium is a durability bet the static methods structurally cannot frame. The underlying inputs are sourced from the filing: fiscal 2026 gross margin ran 26.4% versus 26.7% a year earlier per the 10-K's segment walk ("Gross profit as a percent of sales during fiscal 2026 was 26.4% compared to 26.7% during fiscal 2025", accession 0001193125-26-239333), and segment SG&A leverage improved, with the filing reporting segment SG&A "decreased to 13.7% in fiscal 2026 compared to 13.9% during fiscal 2025" (accession 0001193125-26-239333). Margins are drifting down while operating leverage holds; the five-year growth assumption has to run through that mix.

The balance sheet bounds the downside better than most cyclicals can claim. Net cash of about $614 million against $24 million of gross debt, positive free cash flow around $270 million, and a share count that has edged down about half a percent a year over the past four years mean the company can ride out a housing trough without dilution or distress. The bet at today's price is not solvency; it is whether an affordable-housing demand tailwind can hold a cyclical manufacturer at its self-funding growth pace for five years, when history says that happens about three times in ten.

Catalysts

The freshest read arrived May 26, 2026, when Champion posted fourth-quarter and full-year fiscal 2026 results: sales up 4.6% to $621.3 million in the quarter and 7.3% to $2.7 billion for the year, with fourth-quarter net income down 18.4% to $29.7 million even as adjusted net income held roughly flat at $37.7 million. Alongside the print, the board refreshed the share repurchase authorization to $150 million after the company retired $200 million of stock during the fiscal year. The tension in the report is the one to track into fiscal 2027: revenue growth is being carried by average selling price and acquisitions while unit volumes and backlog soften, a pattern that showed up in the February print (U.S. homes sold down 2.6%, backlog down 15.1% sequentially to $266 million).

The street has been leaning constructive through the softness. RBC Capital upgraded the stock to Outperform with a $91 target in November 2025, and Barclays lifted its target to $111 in January 2026; the consensus target sits near $90 across six analysts. Those targets sit above today's $81.27 for the same reason the growth-crediting methods do: they extend the current growth rate forward. The static readings of current profits do not support the premium, so the targets are a bet on persistence, not on today's earnings.

The next quarterly report, expected on the company's usual early-August cadence, carries the first read on fiscal 2027 demand: whether spring order rates rebuilt the backlog, whether gross margin holds the 25% to 26% band management guided for the March quarter, and whether mortgage and chattel financing costs are still pushing entry-level buyers toward factory-built product. Management framed itself as cautiously optimistic on demand at the February call, citing new consumers entering the offsite-built market; the backlog line will say whether that optimism was earned.

Peer Cohorts (Per Segment, With Filing Citations)

U.S. Factory-built Housing / Canadian Factory-built Housing (reported)

• CVCO (Cavco Industries, Inc.)
• FY2025 10-K: …loans helps to increase the availability of manufactured home financing to distributors, community owners and developers and provides additional opportunity for product exposure to potential home buyers. While these initiatives support our ongoing efforts to expand product distribution, they also expose us to risks…
• FY2025 10-K: …business. In Texas, policies are written through one affiliated managing general agent, whic h produces a ll premiums, and through local agents, most of whom are manufactured home distributors. All business outside the state of Texas is written on a direct basis through local agents. 6 Table of Contents Company…
• UFPI (UFP INDUSTRIES, INC.)
• FY2025 10-K: …non-residential building, distribution, and infrastructure. Our customers in this business unit include general contractors as well as distributors. We believe we are unique in our ability to deliver highly engineered, factory-built solutions to job sites. 5 Table of Contents We believe the diversification of the end…
• FY2025 10-K: …a more complete solution to our customers' packaging needs and requirements. Over the last several years, we have added additional products and services to this business unit to meet the increasing demand of our customers to provide a wider array of innovative solutions to their packaging and shipping needs. Through…
• FBIN (Fortune Brands Innovations, Inc.)
• FY2025 10-K: …consists of spending on both new home construction and repair and remodel activities within existing homes, with a substantial majority of the markets we serve consisting of repair and remodel spending. Growth in the U.S. market for our home products will largely depend on consumer confidence, employment, wage…
• FY2025 10-K: …working to mitigate the anticipated impacts of tariffs through a combination of supply chain actions, cost-out activities and strategic pricing actions across all of our channels and brands. However, this is a rapidly evolving landscape, and our ability to mitigate the anticipated impacts of tariffs could be affected…
• LPX (LOUISIANA-PACIFIC CORPORATION)
• FY2025 10-K: …concerning our: (i) profit by segment; (ii) capital expenditures by segment; (iii) identifiable assets by segment; (iv) goodwill by segment; and (v) geographic area information, is included in "Note 15 - Segment Information" of the Notes to the Consolidated Financial Statements included in Item 8 of this annual…
• FY2025 10-K: …year-over-year. Future economic conditions in the United States and the demand for homes are uncertain due to inflationary impacts on the economy, including interest rates, employment levels, consumer confidence, and financial markets, among other things. Additionally, we have experienced increases in material…
• TREX (Trex Company, Inc.)
• FY2025 10-K: …and point-of-sale display support. We believe that attracting wholesale distributors, who are committed to our products and marketing approach and can effectively sell higher value products to contractor-oriented lumber yards and other retail outlets, is important to our future growth. Our distributors provide…
• FY2025 10-K: Total property, plant and equipment, net $ 1,049,733 $ 922,868 The Company had construction in process as of December 31, 2025 , of approximately $ 372.3 million. The Company expects that substantially all of the construction in process will be completed and put into service during the year ending December 31, 2026.…

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.