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The Zacks Construction Sector has tumbled year-to-date, declining more than 20% in value. However, over the last month, the sector has posted a solid 6.3% return vs. the S&P 500’s 1.4% return, signaling that buyers are finally stepping up.
The table below illustrates the sector’s performance vs. the S&P 500 over several timeframes.
Image Source: Zacks Investment Research
One company residing in the sector that sports the highly-coveted Zacks Rank #1 (Strong Buy) is Skyline Corp. (SKY Quick QuoteSKY - Free Report) . Skyline is one of the largest homebuilders in North America that designs, produces, and distributes manufactured housing and recreational vehicles.
Skyline operates 42 manufacturing facilities, giving the company the flexibility needed to construct various manufactured and modular homes, ADUs, park-model RVs, and modular buildings.
In addition to Skyline’s core home building business, the company operates a factory-direct retail business, Titan Factory Direct, and Star Fleet Trucking, a transportation business.
The year-to-date performance of Skyline shares is undoubtedly disappointing, losing more than a fourth of their value and extensively underperforming the S&P 500.
Image Source: Zacks Investment Research
However, take a look at the chart below. Over the last month, Skyline shares have soared more than 17%, absolutely crushing the S&P 500’s performance.
Image Source: Zacks Investment Research
The relatively strong price action of Skyline shares as of late is undoubtedly a positive, signaling that bulls are finally starting to reappear and push bears back into hibernation.
The company sports enticing valuation metrics, further displayed by its Style Score of a B for Value. Skyline’s 11.6X forward earnings multiple is nowhere near its median of 25.1X since its IPO in 2018 and is a fraction of 43.9X highs in 2020.
In addition, shares trade at a substantial 35% discount relative to the S&P 500.
Image Source: Zacks Investment Research
Analysts have raised their earnings estimates substantially higher across several timeframes over the last 60 days, helping push the company into a Zacks Rank #1 (Strong Buy).
The $1.58 Zacks Consensus EPS Estimate for the upcoming quarter reflects a triple-digit 110% uptick in quarterly earnings year-over-year. Additionally, current fiscal year earnings are forecasted to grow by a sizable 18% year-over-year.
Top-line growth is just as solid – Skyline is forecasted to generate $2.5 billion in revenue for the current fiscal year, penciling in a rock-solid 12.5% increase in annual revenue year-over-year.
SKY has repeatedly reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in nine straight quarters, all by at least double-digit percentages. Just in its latest quarter, the company recorded a stellar 52% bottom-line beat.
Quarterly revenue results have consistently been reported above expectations as well; over the company’s previous ten quarters, SKY has penciled in eight top-line beats.
The chart below illustrates the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
One of the best ways investors can find expected winners within the market is by utilizing the Zacks Rank – one of the most potent market tools out there that does all of the hard work.
A portfolio consisting of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 31 years with an average annual return of 25%.
Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Skyline Corp. (SKY Quick QuoteSKY - Free Report) would be an excellent bet for investors looking to add a solid stock to their portfolios, as displayed by its Zack Rank #1 (Strong Buy).
Skyline Corporation (SKY) - free report >>
Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next 30-90 days.
Recent stocks from this report have soared up to +178.7% in 3 months - this month's picks could be even better. See our report's 7 new picks today, absolutely FREE.
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At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +24.90% per year. These returns cover a period from January 1, 1988 through June 6, 2022. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.
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