Value
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.9 |
| P/S | 8.9 |
| EV/EBITDA | 1.3 |
| Fwd P/E | 6.2 |
| PEG | 7.1 |
| Analyst target | 3.0 |
- ▸Forward P/E: 20.8x
- ▸PEG: 0.99
CVCO · Why this verdict
Why Cavco Industries (CVCO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Cavco Industries has sustained a solid earnings cadence — three of the last four quarters beat consensus — but the stock sits just 1% below its near-term resistance target with a reward-to-risk ratio of roughly 0.14 to 1, leaving the setup deeply unfavorable for new entries. Customer and geographic concentration add structural fragility that makes the current price particularly uncomfortable given the limited upside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business earns a Piotroski F-Score of 7 out of 9 and retains roughly 73% of net income as free cash flow — signs of financial discipline — but the absence of a durable competitive advantage means these metrics are structurally unprotected if the manufactured-housing cycle turns. Quality breakdown | Free cash flow conversion stays above 65% of net income and the Piotroski score remains above 6 out of 9 for the next four quarters, confirming quality is holding despite the absent moat. | →Stable |
| CounterWithout a competitive moat, margin and returns are more susceptible to input cost cycles and pricing pressure; a sustained downturn in housing could compress returns far more rapidly than the current metrics suggest. | ||
Independent distributors account for 77% of revenue and retail operations are concentrated in Texas, leaving the business acutely exposed to a single-channel disruption or a regional demand downturn. Bear case | Customer concentration from independent distributors falls below 65% of revenue within 12 months, as channel or geographic diversification reduces the single-point risk. | →Stable |
| CounterConcentrated distribution relationships can be operationally efficient and relatively stable; if the Texas market remains healthy, the concentration may not translate to realized revenue or margin risk. | ||
Three of the last four quarterly results produced positive earnings surprises, with the most recent beat at roughly 2% following a single miss; this cadence suggests demand has remained sufficiently stable to clear conservative guidance. Earnings | Four consecutive quarterly beats, each with a positive surprise, over the next 12 months would confirm the earnings delivery cadence is durable. | →Stable |
| CounterThe immediately preceding quarter produced a -7.0% negative surprise; housing affordability stress or input cost spikes could snap the beat streak in a single period. | ||
With roughly 1% of headroom remaining to the near-term resistance target and a reward-to-risk ratio of approximately 0.14 to 1, the current entry offers seven times more potential downside than upside, making new or added exposure difficult to justify. Price targets | Upside to the near-term price target exceeds 8% on any new entry evaluation, restoring a favorable reward-to-risk balance before a position is added. | →Stable |
| CounterResistance levels can be resolved to the upside on a strong catalyst; a significant earnings beat could reset the target higher and quickly repair the risk/reward geometry. | ||
The business earns a Piotroski F-Score of 7 out of 9 and retains roughly 73% of net income as free cash flow — signs of financial discipline — but the absence of a durable competitive advantage means these metrics are structurally unprotected if the manufactured-housing cycle turns.
→StableQuality breakdown
- Expectation
- Free cash flow conversion stays above 65% of net income and the Piotroski score remains above 6 out of 9 for the next four quarters, confirming quality is holding despite the absent moat.
CounterWithout a competitive moat, margin and returns are more susceptible to input cost cycles and pricing pressure; a sustained downturn in housing could compress returns far more rapidly than the current metrics suggest.
Independent distributors account for 77% of revenue and retail operations are concentrated in Texas, leaving the business acutely exposed to a single-channel disruption or a regional demand downturn.
→StableBear case
- Expectation
- Customer concentration from independent distributors falls below 65% of revenue within 12 months, as channel or geographic diversification reduces the single-point risk.
CounterConcentrated distribution relationships can be operationally efficient and relatively stable; if the Texas market remains healthy, the concentration may not translate to realized revenue or margin risk.
Three of the last four quarterly results produced positive earnings surprises, with the most recent beat at roughly 2% following a single miss; this cadence suggests demand has remained sufficiently stable to clear conservative guidance.
→StableEarnings
- Expectation
- Four consecutive quarterly beats, each with a positive surprise, over the next 12 months would confirm the earnings delivery cadence is durable.
CounterThe immediately preceding quarter produced a -7.0% negative surprise; housing affordability stress or input cost spikes could snap the beat streak in a single period.
With roughly 1% of headroom remaining to the near-term resistance target and a reward-to-risk ratio of approximately 0.14 to 1, the current entry offers seven times more potential downside than upside, making new or added exposure difficult to justify.
→StablePrice targets
- Expectation
- Upside to the near-term price target exceeds 8% on any new entry evaluation, restoring a favorable reward-to-risk balance before a position is added.
CounterResistance levels can be resolved to the upside on a strong catalyst; a significant earnings beat could reset the target higher and quickly repair the risk/reward geometry.
Per-dimension breakdown
Quality
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.9 |
| ROA | 6.6 |
| Gross margin | 0.5 |
| Op margin | 3.5 |
| Net margin | 4.2 |
| Current ratio | 8.4 |
| FCF quality | 5.5 |
| Moat | 4.8 |
| Piotroski F | 7.8 |
- ▸Earnings quality warning: 73% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
5.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.5 |
| EPS growth | 6.2 |
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 7.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Overbought (RSI 70)
- ▸Above 200-day MA
Sentiment
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.0 |
| erm sentiment | 5.0 |
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $1,201,307 (0.025% of mkt cap)
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.0 |
| quality rank | 6.6 |
| growth rank | 9.4 |
- ▸Superior ROE vs peers
- ▸Industry growth leader
Technical
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.5 |
| support resistance | 0.5 |
| 52w position | 7.5 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.8 |
| days to cover | 7.9 |
| volatility | 2.0 |
| put call | 8.3 |
| implied vol | 5.7 |
| max pain risk | 3.0 |
| beta | 5.8 |
| debt equity | 1.1 |
- ▸Above max pain $530
- ▸Concentration risks: 3 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 5.6 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.1>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.0=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.00
Upside
-15.0%
Downside
15.0%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 70
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.31>1.3, MCap $4.7B<$5B
Investment implication
The F-path SELL output reflects an overall score of 3.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 6.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.0=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.00 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 6.1, Catalyst at 5.6, and Value at 5.3; the weakest are Technical at 2.8, Insider at 3.9, and Risk (lower is worse) at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -1.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Three of the last four quarterly results produced positive earnings surprises, with the most recent beat at roughly 2% following a single miss; this cadence suggests demand has remained sufficiently stable to clear conservative guidance.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Independent distributors account for 77% of revenue and retail operations are concentrated in Texas, leaving the business acutely exposed to a single-channel disruption or a regional demand downturn.
Trip ifIndependent distributor revenue share falls below 60% of total revenue for 2 consecutive quarters.
- P3With roughly 1% of headroom remaining to the near-term resistance target and a reward-to-risk ratio of approximately 0.14 to 1, the current entry offers seven times more potential downside than upside, making new or added exposure difficult to justify.
Trip ifUpside to the near-term price target exceeds 8% on any new entry evaluation.
- P4The business earns a Piotroski F-Score of 7 out of 9 and retains roughly 73% of net income as free cash flow — signs of financial discipline — but the absence of a durable competitive advantage means these metrics are structurally unprotected if the manufactured-housing cycle turns.
Trip ifFree cash flow conversion falls below 50% of net income for 2 consecutive quarters.