Core Insights - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] - The Zacks Momentum Style Score helps investors identify stocks with strong momentum, addressing the challenges of defining momentum [2] Company Overview: Cavco (CVCO) - Cavco currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy), indicating a favorable outlook for the stock [3][4] - Over the past week, CVCO shares increased by 8.8%, outperforming the Zacks Building Products - Mobile Homes and RV Builders industry, which rose by 0.71% [6] - In the last quarter, CVCO shares rose by 12.91%, and over the past year, they increased by 18.34%, while the S&P 500 only moved 4.53% and 13.83%, respectively [7] Trading Volume and Market Activity - The average 20-day trading volume for CVCO is 141,035 shares, which serves as a baseline for price-to-volume analysis [8] - A rising stock with above-average volume is generally considered bullish, while a declining stock with above-average volume is typically bearish [8] Earnings Outlook - Recent earnings estimate revisions for CVCO show one upward revision for the full year, increasing the consensus estimate from $25.16 to $26.11 over the past 60 days [10] - For the next fiscal year, one estimate has moved upwards with no downward revisions, indicating a positive earnings outlook [10] Conclusion - Considering the positive momentum indicators and earnings outlook, CVCO is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a potential candidate for investors seeking short-term gains [12]

Core Insights - The article highlights the author's qualifications and experience in equity research and investment analysis, emphasizing a strong focus on the U.S. equity market, particularly in the consumer staples sector, which is viewed as offering resilient long-term investment opportunities [1]. Group 1: Qualifications and Experience - The author is a certified FMVA and FPWMP, equipped with skills to analyze financial statements and build valuation models [1]. - Participation in the CFA Research Challenge provided practical experience in equity analysis and industry research [1]. - The author holds a degree in Finance from Alexandria University, graduating in 2024 with a CGPA of 3.6 [1]. Group 2: Analytical Focus - The analytical focus is on the U.S. equity market, with a particular interest in defensive stocks within the consumer staples sector [1]. - Experience includes preparing investment reports across various sectors such as healthcare, consumer staples, and industrials, enhancing the ability to evaluate companies across diverse industries [1]. Group 3: Professional Development - In 2023, the author joined AIESEC, which helped develop leadership, communication, and teamwork skills through global exchange and project collaboration [1].

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Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying the right ones can be challenging due to associated risks and volatility [1] Group 1: Company Overview - Cavco (CVCO) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 20% and is projected to achieve an EPS growth of 20.7% this year, significantly outperforming the industry average of -0.8% [5] Group 2: Financial Metrics - Cavco's year-over-year cash flow growth stands at 12.2%, surpassing the industry average of 0% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 19.6%, compared to the industry average of 8.7% [7] Group 3: Earnings Estimates - The Zacks Consensus Estimate for Cavco's current-year earnings has increased by 3.8% over the past month, indicating a positive trend in earnings estimate revisions [8] - Cavco has earned a Growth Score of B and holds a Zacks Rank 2 due to these positive earnings estimate revisions, positioning it well for potential outperformance [10]

Core Insights - Cavco Industries reported strong quarterly earnings, exceeding analyst estimates on both revenue and net income, which attracted investor interest [1][4] Financial Performance - Cavco generated approximately $557 million in revenue for Q2 of fiscal 2026, marking a nearly 10% increase compared to the same period in fiscal 2025 [3] - Net income rose by just under 20% year-over-year to $52.4 million, equating to $6.55 per share, surpassing analyst expectations of $543 million in revenue and $6.09 per share [3][4] Market Reaction - Following the earnings report, Cavco's stock price increased by over 5%, significantly outperforming the S&P 500 index, which only rose by 0.3% [2] Business Segments - The company experienced growth across all business segments, particularly in family-built housing, which contributed $535 million to revenue, a 10% increase [6]

Financial Performance - Net revenue for the three months ended September 27, 2025, was $556,527, an increase of 9.7% compared to $507,461 for the same period in 2024[12]. - Gross profit for the six months ended September 27, 2025, was $263,913, representing a 20.2% increase from $219,524 in the prior year[12]. - Net income for the six months ended September 27, 2025, was $104,023, up 33.0% from $78,244 for the same period in 2024[12]. - Home sales revenue for the three months ended September 27, 2025, was $509,750, a 8.5% increase from $469,676 in the same period of 2024[23]. - The company’s comprehensive income for the six months ended September 27, 2025, was $104,233, compared to $78,501 for the same period in 2024, marking a 32.8% increase[12]. - Net income for the three months ended September 27, 2025, was $52,381,000, compared to $43,815,000 for the same period in 2024, representing a 19% increase[51]. - The company’s total net revenue for the six months ended September 27, 2025, was $1,113,384,000, compared to $985,060,000 for the same period in 2024, reflecting a 13% increase[55]. Cash Flow and Liquidity - Cash provided by operating activities for the six months ended September 27, 2025, was $133,994, compared to $102,074 in the prior year, reflecting a 31.1% increase[14]. - The company reported a net cash increase of $24,609 for the six months ended September 27, 2025, compared to an increase of $17,464 in the same period of 2024[14]. - The company’s cash, cash equivalents, and restricted cash at the end of the period were $399,954, compared to $386,217 at the end of the same period in 2024[14]. - Cash, cash equivalents, and restricted cash at the end of the period increased by $13,737,000 to $399,954,000 as of September 27, 2025, from $386,217,000 in the prior year[88]. Expenses and Profitability - Selling, general and administrative expenses for the three months ended September 27, 2025, were $72,229, up 7.4% from $66,997 in the same period of 2024[12]. - Gross profit for the three months ended September 27, 2025, increased by 15.7% to $134,407,000 compared to $116,122,000 for the same period in 2024[79]. - Financial services gross profit surged by 158.9% to $11,914,000 for the three months ended September 27, 2025, driven by higher insurance premiums and lower claim losses[80]. Assets and Investments - The company’s total assets as of September 27, 2025, were estimated at $1,041,977,000, reflecting an increase from $1,033,411,000 as of June 29, 2024[50]. - Total consolidated assets as of September 27, 2025, were $1,449,069,000, an increase from $1,406,645,000 on March 29, 2025[58]. - Investments increased from $37,909 thousand in March 2025 to $41,206 thousand in September 2025, representing an increase of 8.0%[25]. - The fair value of available-for-sale debt securities rose from $21,415 thousand in March 2025 to $23,197 thousand in September 2025, an increase of 8.3%[25]. Loans and Financing - Consumer loans receivable decreased from $58,162 thousand in March 2025 to $54,428 thousand in September 2025, a decline of 6.3%[28]. - Commercial loans receivable increased from $100,297 thousand in March 2025 to $108,038 thousand in September 2025, an increase of 7.3%[30]. - The weighted average contractual interest rate for consumer loans held for investment was 7.8% in September 2025, slightly down from 7.9% in March 2025[28]. - The company had outstanding interest rate lock commitments with a notional amount of $25.2 million as of September 27, 2025, up from $16.3 million as of March 29, 2025[46]. Stock and Equity - The total stockholders' equity increased to $1,086,137 thousand as of September 27, 2025, from $1,064,582 thousand as of March 29, 2025[49]. - The stock repurchase plan announced on October 31, 2024, approved $100 million in stock repurchases, with no remaining balance as of September 27, 2025[100]. - The stock repurchase plan announced on May 22, 2025, approved $150 million in stock repurchases, with $142 million remaining as of September 27, 2025[100]. - During the second quarter of fiscal year 2026, a total of 67,070 shares were repurchased, with an average price paid per share of $549.73[99]. Market and Operational Insights - The factory-built housing segment generated net revenue of $535,117,000 for the three months ended September 27, 2025, up from $486,343,000 in the same period of 2024, reflecting a 10% growth[55]. - The number of factory-built homes sold by company-owned retail sales centers increased by 15.0% to 1,187 homes for the three months ended September 27, 2025[76]. - The backlog of orders as of September 27, 2025, was $210 million, up from $197 million at March 29, 2025, but down from $276 million at September 28, 2024[73]. - The average net revenue per factory-built home sold increased by 4.4% to $103,344 for the three months ended September 27, 2025[76]. - The company operates 31 homebuilding production lines across various states and two international lines in Mexico[65]. - The company is focused on building energy-efficient homes and exploring niche market opportunities to enhance competitiveness[68]. Strategic Acquisitions - The company completed the acquisition of American Homestar Corporation for $190 million, enhancing its manufacturing and retail presence in the South Central U.S.[59]. - The company plans to acquire American Homestar and continue evaluating potential acquisitions and strategic investments[86].

Financial Data and Key Metrics Changes - Revenue increased by 9.7% year-over-year to $556.5 million, with a slight sequential decrease of $0.3 million [11] - Operating profit rose by approximately 27% compared to last year's Q2 and up 3% sequentially [4] - Net income was $52.4 million, compared to $43.8 million in the same quarter of the prior year, with diluted earnings per share increasing to $6.55 from $5.28 [15][14] Business Line Data and Key Metrics Changes - Factory-built housing segment net revenue was $535.1 million, up 10% year-over-year, driven by a 5.4% increase in homes sold and a 4.4% increase in average revenue per home sold [11] - Financial services segment net revenue increased by 1.4% to $21.4 million, with operating profit rising from a loss to an $8 million profit [12][8] Market Data and Key Metrics Changes - National shipments in the industry were up over 3% year-to-date through August, with notable double-digit growth in many northern U.S. regions [4] - The Southeast region experienced a decline in shipments, down about 4% year-to-date and 10% in July and August compared to last year [5] Company Strategy and Development Direction - The company is focused on capital allocation, including investments in existing plants, acquisitions, and share repurchases, with $36 million of common shares repurchased [10][15] - The integration of the American HomeStar acquisition is progressing well, with expectations of adding value over the coming quarters [9][44] Management's Comments on Operating Environment and Future Outlook - Management noted significant regional differences in market performance, with a balanced market overall despite challenges in the Southeast [8][26] - The company is monitoring production closely and adjusting as necessary, indicating a cautious but optimistic outlook for the upcoming quarters [8][26] Other Important Information - The effective income tax rate increased to 22.1% due to a reduction in expected tax credits [14] - The company reported a cash balance of $400 million, with cash provided by operating activities at $78.5 million [16] Q&A Session Summary Question: How are orders trending into fiscal Q3? - Management indicated that wholesale orders were slightly down in the quarter, but backlog has stabilized and grown a little [24][26] Question: What is the current state of the Texas market? - The Texas market is performing well, with strong retail results contributing positively to production [32] Question: What are the expectations for gross margins in the next quarters? - Management acknowledged input cost pressures but emphasized the strength of their business model in managing costs [33][35] Question: How is the American HomeStar acquisition performing? - The integration is going well, and the acquired company is expected to contribute positively to the overall business [44][46] Question: What is the impact of tariffs on costs? - Tariffs have added approximately $2 million in costs for Q2, with potential increases due to recent tariff changes on Canadian lumber [35][92] Question: How does the company maintain pricing in the Southeast? - Management stated that pricing has remained stable despite lower order rates, indicating a healthy market environment [95]

Core Insights - Cavco (CVCO) reported quarterly earnings of $6.55 per share, exceeding the Zacks Consensus Estimate of $6.3 per share, and up from $5.28 per share a year ago, representing an earnings surprise of +3.97% [1] - The company achieved revenues of $556.53 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.82% and increasing from $507.46 million year-over-year [2] - Cavco has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The sustainability of Cavco's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3] - The current consensus EPS estimate for the upcoming quarter is $5.95 on revenues of $542.9 million, while for the current fiscal year, it is $25.16 on revenues of $2.22 billion [7] Industry Context - The Building Products - Mobile Homes and RV Builders industry, to which Cavco belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Cavco's stock performance [5]

Financial Performance - Net revenue for Q2 2026 was $556.5 million, an increase of $49 million or 9.7% compared to $507.5 million in Q2 2025, driven by home sales volume and average selling price growth[6]. - Income before income taxes rose to $67 million, up $12 million or 22.4% compared to $55 million in the same period last year[6]. - Net income per diluted share attributable to common stockholders was $6.55, reflecting a 24% increase from $5.28 in the prior year quarter[6]. - Net revenue for the three months ended September 27, 2025, was $556.5 million, an increase of 9.7% compared to $507.5 million for the same period in 2024[19]. - Net income for the three months ended September 27, 2025, was $52.4 million, representing a 19.4% increase from $43.8 million in the same quarter of 2024[19]. - Basic net income per share for the six months ended September 27, 2025, was $13.12, compared to $9.48 for the same period in 2024, reflecting a 38.0% increase[19]. - The company reported a 26.6% increase in income from operations for the three months ended September 27, 2025, totaling $62.2 million compared to $49.1 million in the prior year[19]. Sales and Production - Home sales volume increased by 5.4%, with factory capacity utilization rising to approximately 75% from 70% in the prior year[6]. - Backlogs at the end of the quarter totaled $210 million, representing 5-7 weeks of production[6]. Profitability - Gross profit margin for factory-built housing remained flat at 22.9%, while financial services gross profit margin surged to 55.6% from 21.8% in the prior year[6]. - Gross profit for the six months ended September 27, 2025, reached $263.9 million, up 20.2% from $219.5 million in the prior year[19]. Financial Services - The financial services segment's net revenue increased due to higher insurance premiums, contributing to a gross profit increase of 158.9%[8][11]. Capital and Investments - Capital expenditures for the three months ended September 27, 2025, were $9.9 million, significantly higher than $4.9 million in the same period of 2024[21]. Corporate Developments - The company successfully closed the acquisition of American Homestar Corporation, enhancing operational success and integration efforts[5]. - Lisa Daniels was appointed to the Board of Directors, bringing valuable experience to the company[6]. Assets and Liabilities - Total assets as of September 27, 2025, amounted to $1.449 billion, an increase from $1.407 billion as of March 29, 2025[17]. - Total liabilities increased to $362.9 million as of September 27, 2025, compared to $342.1 million as of March 29, 2025[17]. - The current portion of consumer loans receivable, net, was $33.5 million as of September 27, 2025, down from $35.9 million as of March 29, 2025[17]. Outlook - The company’s outlook remains positive, with expectations for continued growth in the manufactured housing business despite potential risks and uncertainties[15]. Stock Activity - Stock repurchases amounted to approximately $36 million during the quarter, with $142 million remaining available under the Board's authorization[6].

Core Viewpoint - Cavco Industries, Inc. reported strong financial results for the second fiscal quarter ended September 27, 2025, with significant growth in net revenue and net income, alongside the successful acquisition of American Homestar Corporation and the addition of Lisa Daniels to the Board of Directors [1][3][4]. Financial Performance - Net revenue for the quarter was $556.5 million, an increase of $49 million or 9.7% compared to $507.5 million in the same quarter of the previous year, driven by higher home sales volume and average selling price per home [5][19]. - Net income for the quarter was $52.4 million, up 19.6% from $43.8 million in the prior year, with diluted net income per share increasing by 24.1% to $6.55 from $5.28 [9][20]. - The factory-built housing segment saw a gross profit margin of 22.9%, consistent with the same period last year, while the financial services segment's gross profit margin increased significantly to 55.6% from 21.8% [5][12]. Operational Highlights - Factory-built modules sold increased by 7.1% to 8,699 units, and factory-built homes sold rose by 5.4% to 5,178 units [5][6]. - Backlogs at the end of the quarter totaled $210 million, representing approximately 5-7 weeks of production [5]. - The company executed stock repurchases totaling approximately $36 million during the quarter, with $142 million remaining available for future repurchases [5]. Segment Performance - In the factory-built housing segment, net revenue increased due to higher home sales volume and an increase in net revenue per home sold [7][12]. - The financial services segment's net revenue grew due to higher insurance premiums, reflecting improved underwriting and lower claims losses compared to prior periods [12]. Management Commentary - The CEO highlighted the strong performance across all business segments and expressed gratitude for the commitment of the American Homestar team during the acquisition integration [3][4]. - The addition of Lisa Daniels to the Board of Directors was noted as a positive development for the company, bringing valuable experience and a good personal fit [4].