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Universal Forest Products (UFPI) Down 9.5% Since Earnings Report
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A month has gone by since the last earnings report for Universal Forest Products, Inc. (UFPI - Free Report) . Shares have lost about 9.5% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is UFPI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Universal Forest Products reported improved year-over-year results for the fourth quarter of 2017.
Net earnings in the quarter were 51 cents per share, up 50% over the year-ago tally of 34 cents. Excluding the benefits from changes in the corporate taxes, the bottom line in the fourth quarter was 41 cents.
Results were driven by healthy sales growth in three segments, partially offset by higher cost of sales and operating expenses.
For 2017, the company's net earnings were $1.94 per share, increasing 18% year over year.
Revenues Gain from Segmental Performance
Universal Forest Products' net sales in the fourth quarter were $966.1 million, reflecting a year-over-year growth of 12.4%. The improvement was primarily driven by a healthy segmental performance.
Of the year-over-year growth, roughly 5% came from growth in unit sales and 8% from favorable pricing.
The company's segmental sales sum up to total gross sales. In the fourth quarter, the company's gross sales totaled $981.5 million, up 13% year over year. A brief snapshot of end-market sales has been provided below:
Retail Building Materials (33.7% of fourth-quarter gross sales): The segment's sales totaled $330.6 million, recording a 20% increase year over year. Unit sales grew 13% while favorable pricing contributed 7% to sales growth. Of these, acquired assets benefitted by 10%.
Industrial (35.2%): Sales in this segment grew 9% to $345.1 million on the back of 7% gain from favorable pricing and 2% from growth in unit sales.
Housing and Construction (31.2%): This segment's sales were recorded around $305.8 million, up 10% year over year on the back of favorable pricing. Business was strong in the manufactured housing market while weak in the commercial and residential construction.
For 2017, the company's net sales increased 21.6% year over year to $3,941.2 million. New product sales in the year were $418.4 million, up 23.5% year over year.
Margin Profile Mixed
In the quarter, Universal Forest Products' cost of sales increased 13.5% year over year to $836.9 million. It represented 86.6% of the quarter's net sales, an increase from 85.8% in the year-ago quarter. Gross margin decreased 80 bps to 13.4%. Selling, general and administrative expenses of $87.8 million grew 0.9% year over year and represented 9.1% of net sales. Operating margin inched up 20 bps to 4.3%.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Universal Forest Products' cash and cash equivalents were roughly $28.3 million, up from $22 million at previous quarter-end. Long-term debt edged down 0.8% sequentially to $144.7 million.
In 2017, the company generated $136.6 million net cash from its operating activities, decreasing 20.8% from the previous year. Capital spent on the purchase of property, plant and equipment totaled at $71.1 million versus $53.8 million in 2016. Shares worth $13 million were repurchased while the dividend of $19.6 million was distributed in the year.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
Universal Forest Products, Inc. Price and Consensus
At this time, UFPI has an average Growth Score of C, a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
UFPI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Universal Forest Products (UFPI) Down 9.5% Since Earnings Report
A month has gone by since the last earnings report for Universal Forest Products, Inc. (UFPI - Free Report) . Shares have lost about 9.5% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is UFPI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Universal Forest Products reported improved year-over-year results for the fourth quarter of 2017.
Net earnings in the quarter were 51 cents per share, up 50% over the year-ago tally of 34 cents. Excluding the benefits from changes in the corporate taxes, the bottom line in the fourth quarter was 41 cents.
Results were driven by healthy sales growth in three segments, partially offset by higher cost of sales and operating expenses.
For 2017, the company's net earnings were $1.94 per share, increasing 18% year over year.
Revenues Gain from Segmental Performance
Universal Forest Products' net sales in the fourth quarter were $966.1 million, reflecting a year-over-year growth of 12.4%. The improvement was primarily driven by a healthy segmental performance.
Of the year-over-year growth, roughly 5% came from growth in unit sales and 8% from favorable pricing.
The company's segmental sales sum up to total gross sales. In the fourth quarter, the company's gross sales totaled $981.5 million, up 13% year over year. A brief snapshot of end-market sales has been provided below:
Retail Building Materials (33.7% of fourth-quarter gross sales): The segment's sales totaled $330.6 million, recording a 20% increase year over year. Unit sales grew 13% while favorable pricing contributed 7% to sales growth. Of these, acquired assets benefitted by 10%.
Industrial (35.2%): Sales in this segment grew 9% to $345.1 million on the back of 7% gain from favorable pricing and 2% from growth in unit sales.
Housing and Construction (31.2%): This segment's sales were recorded around $305.8 million, up 10% year over year on the back of favorable pricing. Business was strong in the manufactured housing market while weak in the commercial and residential construction.
For 2017, the company's net sales increased 21.6% year over year to $3,941.2 million. New product sales in the year were $418.4 million, up 23.5% year over year.
Margin Profile Mixed
In the quarter, Universal Forest Products' cost of sales increased 13.5% year over year to $836.9 million. It represented 86.6% of the quarter's net sales, an increase from 85.8% in the year-ago quarter. Gross margin decreased 80 bps to 13.4%. Selling, general and administrative expenses of $87.8 million grew 0.9% year over year and represented 9.1% of net sales. Operating margin inched up 20 bps to 4.3%.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Universal Forest Products' cash and cash equivalents were roughly $28.3 million, up from $22 million at previous quarter-end. Long-term debt edged down 0.8% sequentially to $144.7 million.
In 2017, the company generated $136.6 million net cash from its operating activities, decreasing 20.8% from the previous year. Capital spent on the purchase of property, plant and equipment totaled at $71.1 million versus $53.8 million in 2016. Shares worth $13 million were repurchased while the dividend of $19.6 million was distributed in the year.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
Universal Forest Products, Inc. Price and Consensus
Universal Forest Products, Inc. Price and Consensus | Universal Forest Products, Inc. Quote
VGM Scores
At this time, UFPI has an average Growth Score of C, a grade with the same score on the momentum front. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
UFPI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.