Skyline Champion is Wednesday's IBD Stock Of The Day. The manufactured-home maker is close to a breakout and already clearing early buy points amid strength in housing stocks.
Troy, Mich.-based Skyline produces and installs factory-built homes, park models and modular buildings for families and the hospitality sector. It employs more than 8,100 people with 42 manufacturing facilities across the U.S.
Homebuilding peer Meritage Homes was IBD Stock Of The Day last Thursday.
Skyline has posted earnings and revenue gains for the past nine quarters. The company averaged massive 125% growth in earnings so far in 2022. Revenue is up an average 35% so far this year.
However, the new fiscal year starting in April will be rough for Skyline, and other homebuilders, as weak orders from recent peak mortgage rates translates into declining completed sales. Fitch Ratings expects the housing market to weaken further in 2023, according to its December outlook report. Affordability issues, a softening economic environment and low consumer confidence are likely to persist, which will continue to erode demand.
In its Q3 earnings report on Feb. 6, Skyline CEO Mark Yost noted positive demand in key channels and select markets. But backlogs "continue to trend toward historical levels due to retailer destocking."
Wall Street expects Skyline earnings to topple 38% to 94 cents per share for its upcoming Q4 results, while sales decline 15.9%.
SKY Stock
SKY stock rose 3.5% to 72.86 on Wednesday, after popping 3.6% on Tuesday. Shares are rebounding from the 21-day/10-week lines within a flat base or shallow cup base with a 73.50 buy point, according to MarketSmith. The current pattern can also be viewed as a handle for a long consolidation going back to mid-August.
The stock is already actionable after breaking above its downward-sloping trendline on Tuesday, clearing another early entry just above 71 on Wednesday.
Shares are rising in strong volume this week, MarketSmith data shows.
SKY stock joined IBD Leaderboard on Wednesday.
Skyline ranks second in terms of group leadership for the Building-Mobile/Manufacturing & RV Group, according to IBD Stock Checkup.
SKY stock has a near-perfect 98 EPS Rating based on its strong earnings growth. Its relative strength line is at highs. SKY shares have a 95 RS Rating, indicating it has outperformed a majority of its market peers over the last year.
The homebuilder stock has a stellar 98 Composite Rating out of a best-possible 99. The Composite Rating combines a number of technical indicators into one easy-to-read score.
SKY stock is up 34% year to date.
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