Critical Review: Traeger (NYSE:COOK) versus Cavco Industries (NASDAQ:CVCO)

Cavco Industries (NASDAQ:CVCO) and Traeger (NYSE:COOK) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, analyst recommendations and risk.

Insider and Institutional Ownership

95.6% of Cavco Industries shares are owned by institutional investors. Comparatively, 46.8% of Traeger shares are owned by institutional investors. 1.7% of Cavco Industries shares are owned by company insiders. Comparatively, 16.2% of Traeger shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Cavco Industries has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500. Comparatively, Traeger has a beta of 1.97, meaning that its share price is 97% more volatile than the S&P 500.

Profitability

This table compares Cavco Industries and Traeger’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cavco Industries	7.89%	16.51%	12.17%
Traeger	-23.23%	-13.76%	-3.59%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Cavco Industries and Traeger, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cavco Industries	1	2	1	1	2.40
Traeger	1	5	1	0	2.00

Cavco Industries presently has a consensus target price of $700.00, indicating a potential upside of 19.71%. Traeger has a consensus target price of $50.50, indicating a potential downside of 9.08%. Given Cavco Industries’ stronger consensus rating and higher possible upside, analysts clearly believe Cavco Industries is more favorable than Traeger.

Earnings and Valuation

This table compares Cavco Industries and Traeger”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cavco Industries	$2.24 billion	2.00	$190.55 million	$22.98	25.45
Traeger	$559.52 million	0.28	-$115.18 million	($42.04)	-1.32

Cavco Industries has higher revenue and earnings than Traeger. Traeger is trading at a lower price-to-earnings ratio than Cavco Industries, indicating that it is currently the more affordable of the two stocks.

Summary

Cavco Industries beats Traeger on 12 of the 14 factors compared between the two stocks.

About Cavco Industries

Cavco Industries, Inc. designs, produces, and retails factory-built homes primarily in the United States. It operates in two segments, Factory-Built Housing and Financial Services. The company markets its factory-built homes under the Cavco, Fleetwood, Palm Harbor, Nationwide, Fairmont, Friendship, Chariot Eagle, Destiny, Commodore, Colony, Pennwest, R-Anell, Manorwood, MidCountry, and Solitaire brands. It produces park model RVs; vacation cabins; and factory-built commercial structures, including apartment buildings, condominiums, hotels, workforce housing, schools, and housing for the United States military troops. In addition, the company produces various modular homes, which include single and multi-section ranch, split-level, and Cape Cod style homes, as well as two- and three-story homes, and multi-family units. Further, it provides conforming and non-conforming mortgages and home-only loans to purchasers of various brands of factory-built homes sold by company-owned retail stores, as well as various independent distributors, builders, communities, and developers. Additionally, the company offers property and casualty insurance to owners of manufactured homes. It distributes its products through a network of independent and company-owned retailers, planned community operators, and residential developers. Cavco Industries, Inc. was founded in 1965 and is headquartered in Phoenix, Arizona.

About Traeger

Traeger, Inc., together with its subsidiaries, designs, sources, sells, and supports wood pellet fueled barbecue grills for retailers, distributors, and direct to consumers in the United States. Its wood pellet grills are internet of things devices that allow owners to program, monitor, and control their grill through its Traeger app. The company also produces a library of digital content, including instructional recipes and videos that demonstrate tips, tricks, and cooking techniques that empower Traeger owners to progress their cooking skills; and short- and long-form branded content highlighting stories, community members, and lifestyle content from the Traegerhood. In addition, it provides wood pellets that are used to fire the grills; rubs, spices, and sauces; accessories, such as pop-and-lock accessory rail covers, drip trays, bucket liners, storage bins, and shelves; tools to aid in meal prep, cooking, and cleanup, including pellet storage systems, cleaning solutions, barbecue tools, and MEATER smart thermometer; replacement parts; and apparel and merchandise, including t-shirts, hooded sweatshirts, and baseball hats. Traeger, Inc. was founded in 1987 and is headquartered in Salt Lake City, Utah.