Skyline Champion (SKY:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Skyline Champion(SKY:NYS)

Consumer Cyclical:Residential Construction

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Close Price/Date
$30.45 (USD) 08/24/2020

Weighted Valuation
$26.82 (USD)

Overall Rating
Overvalued by 11.9%

Valuation Models Comparables: $25.42 (USD)
Multiples: $32.11 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $26.00 this stock is Overvalued

Company Overview (SKY:NYS USD)

Price 30.45
Range 30.01 – 31.00
52 week 12.21 – 36.19
Open 30.98
Vol / Avg. 226430/414034
Mkt cap 1.73B
P/E 33.10
Div/yield 0.00/0.00
EPS 1.02
Shares 56.67M
Beta 2.80

Company Description

Skyline Champion Corp operates as a producer of factory-built housing in the United States and Canada. It’s business activities consist of designing, producing and marketing of manufactured housing, modular housing, and park models to independent dealers and manufactured housing communities. Its segments are U.S. Factory-built Housing and Canadian Factory-built Housing. It markets its homes under the brand names including Skyline Homes, Champion Home Builders, Athens Park Models, Dutch Housing, Excel Homes, Homes of Merit, New Era, Redman Homes, Shore Park, Silvercrest, Titan Homes in the U.S. and Moduline and SRI Homes in western Canada.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for SKY:NYS

Using a discounted cash flow model we generated an intrinsic value of $11.97 (USD) for SKY:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

SKY:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $11.97 1% 5% 1% 5%
WACC (or Ke) 15.94 $13.03 $11.07
Terminal Growth Rate 3.00 $11.25 $12.82
Tax Rate 0.32 $12.93 $11.02
Cash Flow 164,817,107 $11.30 $12.64
Capital Expenditures -7,213,000 $11.95 $12.00
Long Term Debt 0 $11.97 $11.97

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $25.42 (USD) for SKY:NYS. We also generated a valuation of $33.60 (USD) using other metrics and comparables.
The comparable companies were Cavco Indus (CVCO:NAS), Green Brick Partners (GRBK:NAS), LGI Homes (LGIH:NAS), Legacy Housing (LEGH:NAS) and M/I Homes (MHO:NYS).

Company SKY:NYS End Date Value
Earnings/Share $0.92 (USD)
Book Value/Share $8.63 (USD)
Sales/Share $22.38 (USD)
Cash Flow/Share $1.45 (USD)
EBITDA/Share $1.91 (USD)
Price Based on Comps Adjustment Factor (%)
$12.89 (USD) 59.2
$17.43 (USD) 20.2
$29.02 (USD) -83.4
$39.77 (USD) 16.1
$21.94 (USD) 60.6
30.68 PE Ratio 14.01 26.39 11.31 14.34 10.90 7.12
3.27 PB Ratio 2.02 2.95 1.29 3.33 1.44 1.09
1.26 PS Ratio 1.30 1.77 0.84 1.45 1.98 0.45
19.51 PCF Ratio 28.43 18.27 0.00 58.27 0.00 8.73
14.36 EV to EBITDA 11.51 17.86 9.91 13.15 8.78 7.87


Using a multiples approach we generated a valuation of  $32.11 (USD) for SKY:NYS

Company SKY:NYS End Date Value
Earnings/Share $0.92 (USD)
Book Value/Share $8.63 (USD)
Sales/Share $22.38 (USD)
Cash Flow/Share $1.45 (USD)
EBITDA/Share $1.91 (USD)
Price Based on Comps Adjustment Factor
$27.37 (USD) 0
$26.33 (USD) 0
$12.29 (USD) 0
$36.18 (USD) 0
$58.38 (USD) 0
Ratios Ratio Average
PE Ratio 29.75
PB Ratio 3.05
PS Ratio 0.55
PCF Ratio 25.00
EV to EBITDA 30.63

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  SKY:NYS for the last 10 years was  2.63

We ran the Adjusted Book Value for  SKY:NYS and generated a book value of  $8.63 (USD)
By multiplying these we get an adjusted valuation of  $22.71 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for SKY:NYS. The 1 analysts have a concensus valuation for SKY:NYS for 2021 of $26.00 (USD).

SKY:NYS Skyline Champion

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 1 0 3.0000 Hold 2020-8-21

Current Price: 30.45 USD

Analyst Consensus
USD Millions 2021
Mean EPS 1.08
# EPS Analysts 1
Mean Revenue 1,349.00
# Revenue Analysts 1
Mean Target Price 26.00
Mean Cash Flow
Mean EBITDA 106.00
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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