Champion Homes (SKY) Margin Improvement Tests Bullish Narratives Despite Premium Valuation

Champion Homes (SKY) reported Q3 2026 revenue of US$656.6 million with basic EPS of US$0.97. This comes against a backdrop where trailing twelve month figures show revenue of about US$2.6 billion and EPS of US$3.77. The company has seen quarterly revenue move between US$593.9 million and US$701.3 million over the past six reported periods, while basic EPS has ranged from US$0.63 to US$1.13. This performance contributes to trailing net income of US$213.6 million. With net profit margin at 8.1% over the last year, the latest quarter keeps the focus on how efficiently Champion Homes is converting its top line into bottom line results.

See our full analysis for Champion Homes.

With the numbers on the table, the next step is to assess how this profit and margin profile compares with the most common stories investors tell about Champion Homes and where those narratives might need updating.

Curious how numbers become stories that shape markets? Explore Community Narratives

29.7% earnings growth backs higher margins

• Over the last twelve months, net income reached US$213.6 million and EPS was US$3.77, alongside net profit margin at 8.1% compared with 6.8% a year earlier.
• What stands out for the bullish view is that trailing earnings grew 29.7% over the past year while the margin lifted to 8.1%. This lines up with the idea of a business benefiting from improving profitability, yet
  • quarterly net income has stayed in a relatively tight band between US$54.3 million and US$64.7 million across the last six reported periods, so the recent strength is spread over several quarters rather than hinging on a single spike
  • trailing EPS of US$3.77 compares with quarterly EPS figures between US$0.63 and US$1.13, which supports the bullish argument that earnings quality has held up across different points in the year rather than being concentrated in just one quarter

Premium 22.1x P/E and DCF fair value gap

• The shares trade at a P/E of 22.1x versus 11.7x for the US Consumer Durables industry and 12.3x for peers, and the current price of US$84.44 sits above the DCF fair value of about US$70.73.
• Skeptics focus on this richer valuation, arguing that paying a premium multiple and a price above the DCF fair value puts more weight on future delivery. The data give them some support because
  • earnings are forecast to grow around 8.3% per year after a 29.7% trailing growth rate, so the expected pace is lower than the past year even though the market is already assigning a much higher P/E than industry and peers
  • the roughly US$13.71 gap between the share price and the DCF fair value means anyone buying at today’s level is relying more on continued strong performance than on a margin of safety implied by the model estimate

Bears who point to the 22.1x P/E and the stock trading above its DCF fair value may want to see how those concerns stack up against the latest detailed breakdown of Champion Homes financials and assumptions in the bear case. 🐻 Champion Homes Bear Case

Revenue band of US$593.9m to US$701.3m supports consistent story

• Over the last six reported periods, quarterly revenue ranged between US$593.9 million and US$701.3 million, backing a trailing twelve month total of about US$2.6b.
• Supporters of a more optimistic view argue that this consistency in the top line, combined with margin improvement, points to a business model that can sustain earnings. The figures give that bullish angle some backing because
  • trailing revenue increased from US$2.34b to US$2.64b across the last six trailing snapshots while net income moved from US$150.3 million to US$213.6 million, so profitability has grown alongside a larger revenue base
  • quarterly net income stayed within a US$36.3 million to US$64.7 million range, which supports the idea that Champion Homes has been able to convert a relatively stable revenue band into higher annual profit without big swings in individual quarters

Bulls who point to US$2.6b in trailing revenue and higher margins may want the full context on how that story could play out if conditions change, including both upside and what could pressure those trends. 🐂 Champion Homes Bull Case

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Champion Homes's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Champion Homes combines steady revenue bands with higher recent margins, but the 22.1x P/E and price above DCF fair value leave little room for disappointment.

If paying up for that kind of premium makes you cautious, use our these 865 undervalued stocks based on cash flows today to focus on companies where the price better reflects underlying cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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