What a difference 365 days can make. This time last year, manufactured housing was an industry in despair, and Champion Enterprises (NYSE:CHB) was reporting a $0.03-per-share loss to Wall Street. Twelve months later, the company is poised to report what analysts hope will be a $0.12-per-share profit before the market opens tomorrow.

Wall Street Wisdom:

  • General consensus. Only three analysts even bother tracking this sleepy little company -- but each of them rates it a buy.
  • Revenues. Analysts believe that in Q4 2005, Champion bested its year-ago sales numbers by more than 9%. $319 million is the target.
  • Earnings. I said this already, right? Wall Street wants to see $0.12 per share for the quarter, $0.51 for the year.

Margin watch:
Champion gets by on exceedingly slim margins, but over the past 18 months, those margins have been showing some gradual improvement. The gross is up 150 basis points, the operating margin has more than doubled, and with the exception of the year-ago quarter mentioned above, the company has earned a net profit in each of the past six quarters.

Margins %

6/04

10/04

1/05

4/05

7/05

10/05

Gross

16

17

17.3

17.6

17.8

17.5

Op.

2

4

3.5

3.9

4.3

4.3

Net

(7)

1.5

1.5

2.9

2

2.2
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish lookout:
As demand for its products builds in the wake of last year's housing-battering hurricanes, Champion is on the comeback trail. But the company still has a few "issues" we need to keep an eye on. I highlighted two of these in reviewing Champion's last earnings report: Last quarter, both the company's cost of sales and its accounts receivable grew faster than sales itself. The former hurts Champion's margins; the latter depresses its free cash flow. Good reasons for us to hope we see further evidence of neither on tomorrow's earnings report.

Fool contributor Rich Smith does not own shares of Champion.