Cavco Industries Stock Climbs 13% After Record Revenue and Earnings Beat as Factory-Built Home Sales Rise

Shares of Cavco Industries jumped 13% on Friday after the manufactured-housing company reported record quarterly revenue and earnings that easily beat Wall Street's estimates, as sales of its factory-built homes rose.

Cavco stock rose $71.75, or 13.11%, to close at $619. The shares opened at $613.77, up from Thursday's close of $547.25.

Volume reached about 249,000 shares, more than double the three-month average of about 106,000. The company's market value rose to about $4.7 billion.

The rally came as the broader market fell, with the S&P 500 down 1.82%.

Record revenue

Cavco reported results for its fiscal second quarter, which ended Sept. 26. The quarter is part of the company's fiscal 2027.

Revenue rose 17.9% from a year earlier to $656.4 million, a second straight quarterly record. The increase was driven by growth in both the number of homes sold and the average selling price.

Diluted earnings rose to $7.17 per share from $6.55 a year earlier, beating analysts' estimates of about $5.52.

Net income rose to $55.4 million from $52.4 million, and income before taxes rose 9.1% to $73 million.

Home sales jump

Home sales volume rose 15.3% compared with the same quarter last year. The company's plants operated at about 75% of capacity, roughly unchanged from a year earlier.

Gross margin in Cavco's factory-built housing business narrowed to 21.1% from 22.9%, as costs rose slightly faster than revenue.

But the company's financial services business, which includes insurance and lending, performed strongly. Its gross margin rose to 60.2% from 55.6%.

Buybacks and expansion

Cavco bought back about $30 million of its own shares during the quarter. In the first half of the fiscal year, it spent $60 million on repurchases.

The company has also been investing in growth. It increased spending on property, plant and equipment to $55.2 million in the first half, from $18.9 million a year earlier.

Cavco is building a new production facility in El Mirage, Arizona, and earlier completed its acquisition of American Homestar, which it said has exceeded expectations.

Housing affordability

Cavco has positioned itself as a provider of affordable housing amid a shortage of homes in the United States. Factory-built homes are typically much cheaper than site-built houses, making them attractive to buyers struggling with high home prices and mortgage rates.

Chief Executive Bill Boor has previously described the company's investments as reflecting the long-term need for factory-built solutions to what he called the worsening housing crisis in America.

Analysts

Northland initiated coverage of Cavco with an outperform rating earlier in the week. Analysts forecast full-year earnings of about $22.49 per share for fiscal 2027 and $27.71 for fiscal 2028.

Some analysts have flagged valuation as a concern after the stock's run. The shares trade at about 26 times trailing earnings.

Stock performance

Friday's gain left Cavco well within its 52-week range of $443.33 to $713.01. The stock has gained about 15.6% over the past 52 weeks.

What's next

Investors will watch whether Cavco can maintain its sales momentum as interest rates and economic conditions affect housing demand, and whether it can improve profit margins in its core manufacturing business.

The company's backlog of orders and the progress of its new Arizona plant will also be key factors for the stock in the coming quarters.