Champion Homes (SKY): Buy, Sell, or Hold Post Q3 Earnings?

The past six months have been a windfall for Champion Homes’s shareholders. The company’s stock price has jumped 49.9%, hitting $95.50 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is there a buying opportunity in Champion Homes, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Is Champion Homes Not Exciting?

We’re glad investors have benefited from the price increase, but we're sitting this one out for now. Here are three reasons you should be careful with SKY and a stock we'd rather own.

1. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Champion Homes’s revenue to rise by 2.6%, a deceleration versus its 16.2% annualized growth for the past five years. This projection doesn't excite us and indicates its products and services will face some demand challenges.

2. EPS Took a Dip Over the Last Two Years

Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.

Sadly for Champion Homes, its EPS declined by 3.2% annually over the last two years while its revenue grew by 14.5%. This tells us the company became less profitable on a per-share basis as it expanded.

3. New Investments Fail to Bear Fruit as ROIC Declines

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Champion Homes’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

Champion Homes isn’t a terrible business, but it doesn’t pass our bar. After the recent rally, the stock trades at 26.7× forward P/E (or $95.50 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment. We’d recommend looking at an all-weather company that owns household favorite Taco Bell.

Stocks We Would Buy Instead of Champion Homes

Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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