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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. 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.
Share Performance
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.
Valuation
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
Growth Estimates
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.