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Champion Homes, Inc. (SKY) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Champion Homes, Inc. (SKY)

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Intrinsic Value (DCF)

Current$97.46
→
Intrinsic$124.07
+27%
$87.11$124.07$194.20
Market implies 18% growth for 5 years
SKY shows 27% potential upside using 25% growth — reasonable if fundamentals hold.
At $97, the market prices in continued high-teens cash flow growth (18%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $87 → Bull $194. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →21%23%25%27%
8%$151$162$174$187
10%$108$116$124$133
12%$84$90$96$103
14%$69$74$79$84

Bull Case

  • Bull case ($194) offers 99% upside at 30% growth, 9% discount
  • 21% margin of safety vs. base case estimate
  • Market-implied growth (18%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($87) implies 11% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$237.91M
Year 2$297.38M
Year 3$371.73M
Year 4$464.66M
Year 5$580.83M
Terminal$8.55B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$190.32MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is SKY stock undervalued or overvalued?
🟢 UNDERVALUED

SKY trades at $97.46 vs. our DCF-derived intrinsic value of $104.20, implying +20% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of SKY's future cash flows. The bear case ($71.18) still suggests upside, providing margin of safety.

What is SKY's intrinsic value?

Using a 5-year DCF model: Base FCF of $190M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-479M net debt and dividing by 0.06B shares: Bear $71.18 | Base $104.20 | Bull $152.81. Current price $97.46 implies +20% to base case.

How is SKY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($5.57B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.