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Skyline Champion - A Compelling Housing Play

Jun. 02, 2020 3:50 PM ETSkyline Champion Corporation (SKY)3 Comments
Leo Nelissen profile picture
Leo Nelissen


  • Skyline Champion is America's second-largest producer of manufactured houses.
  • The company has certain advantages over on-site producers and should benefit from the COVID-19 impact on the housing market during the next recovery.
  • Balance sheet strength is remarkable and the valuation is fair. However, I like to wait for a second wave of selling before I start buying.

After covering a number of residential REITs focused on manufactured housing, I took a closer look at a company that has been on my radar for a long time. The Indiana based Skyline Champion Corporation (NYSE:SKY) is a leading manufacturer of manufactured homes. The company has benefited from a rapid increase in demand due to rising home prices and a better quality of manufactured houses. Unfortunately, the COVID-19 crisis has caused the stock price to take a big hit - along with the economy in general. Regardless, I believe the company is nearing an interesting valuation that will give investors reason to buy this stock as a long-term housing play.

Skyline Champion Corporation - Overview

Source: Skyline Champion

What's Skyline Champion?

Let’s start by mentioning that Skyline Champion is officially characterized as a residential construction company. In this industry, the company is the 14th largest operator among stock-listed companies with a current market cap of $1.40 billion. The thing that sets Skyline Champion apart from its competitors is its unique business model. Whereas other ‘traditional’ homebuilders fight for market share in crowded metropolitan areas, Skyline Champion enjoys a 17% domestic market share in the manufactured housing industry. This makes the company the second-largest operator in this space with Clayton Homes being number one with a 47% market share. Don’t bother looking that one up as it’s a Berkshire Hathaway (BRK.A) (BRK.B) holding (smart move Buffett!). Anyhow, Skyline Champion is the result of a combination of both Champion and Skyline, which combined their operations in 2018 to build a company focused on manufactured homes, modular homes, park models, commercial modular construction, smart logistics, and retail operations.

Source: Skyline Champion Investor Presentation (November 2019)

While the company’s administrative buildings are in Indiana and Michigan, most of its retail operations are in the South (Texas, Louisiana, Florida). Its manufacturing facilities are spread throughout

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This article was written by

Leo Nelissen profile picture
Welcome to my Seeking Alpha profile!I'm a buy-side financial markets analyst specializing in dividend opportunities, with a keen focus on major economic developments related to supply chains, infrastructure, and commodities. My articles provide insightful analysis and actionable investment ideas, with a particular emphasis on dividend growth opportunities. I aim to keep you informed of the latest macroeconomic trends and significant market developments through engaging content. Feel free to reach out to me via DMs or find me on Twitter (@Growth_Value_) for more insights.Thank you for visiting my profile!

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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