Shares of
Universal Forest Products, Inc.
(
UFPI
) moved higher after the company released strong first quarter 2012
results, which included a 600% earnings surprise, and announced the
acquisition of an Alabama-based manufactured housing supplier.
This Zacks #1 Rank (Strong Buy) wood-based construction materials
provider is trading around its 52-week high and showing strong
momentum.
Upbeat Results and Lucrative Acquisition
On April 19, Universal Forest Products reported an upbeat
first-quarter 2012 with earnings per share at 21 cents, a
remarkable improvement from a loss of 19 cents in the year-ago
quarter and break-even with the previous quarter. It also blew past
the Zacks Consensus Estimate at only 3 cents.
An 18% jump in net sales and better cost control drove the results.
Increased sales were aided by strong demand and favorable weather
conditions.
Inspired by its first quarter results, the company looks forward to
a sustained healthy demand growth in the second quarter as well. At
the moment, the Zacks Consensus Estimate for the quarter is at 68
cents, which is up 17.2% in 30 days.
The acquisition of Alabama-based MSR Forest Products LLC will
compliment Universal Forest's existing manufactured housing
business in the region and enhance capacity utilization and cost
reduction.
Estimates Moving Higher
In the last 30 days, all three estimates for this year and next
have moved higher, pushing the Zacks Consensus Estimate for 2012 up
by 39% to $1.39 per share. For 2013, the Zacks Consensus Estimate
moved up 22.4% to $2.02 per share, suggesting the potential for
year-over-year profit growth of more than 45%.
Valuation & Technicals
Universal Forest Products is currently trading at a forward P/E
multiple of 27.0x, up 7% from the peer group average of 25.2x.
However, with respect to ROE, the valuation looks reasonable.
Currently, the company has a ROE of 2.4% versus the peer group
average of negative 5.2%.
The chart below shows the company's impressive performance over the
last 6 months with share price trading within $27-$38 per share
range.
Headquartered in Grand Rapids, Michigan, Universal Forest Products
Inc. was incorporated in 1955. The company primarily engineers,
manufacturers, treats, distributes, and installs lumber, composite
wood, plastic and other building products.
Major end-markets include Retail Building, Residential
Construction, Commercial Construction and Concrete Forming,
Industrial Packaging/Components and Manufactured Housing. As of
December 2011, the company employed 4,800 people.
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(
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(
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(
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UNIVL FST PRODS (UFPI): Free Stock Analysis
Report
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