Leading building products manufacturer and supplier Universal Forest Products, Inc. (UFPI - Analyst Report) recently completed purchasing the assets of MSR Forest Products, LLC, an Alabama-based manufactured housing product distributor. However, the terms of the deal remain undisclosed for the time being.
Following the agreement, the company’s Alabama based services will be merged with the business of MSR to augment Universal Forest’s productivity and future growth. It is also expected that the integration will help in reducing the company’s operating costs.
Furthermore, the current deal is a smart strategic move, as it will play a key role in reinstating Universal Forest’s position in the manufactured housing market. The company is also hopeful that the deal will help it improve its service offerings in the years ahead.
Earlier, Universal Forest’s net sales in the first quarter of fiscal 2012 grew 18% year over year to $457.1 million. The company’s product demand in all end markets augmented mainly due to favorable weather conditions. In addition, every segment of Universal Forest reported high revenue growth in the quarter.
Universal Forest, encouraged by the first quarter results, is highly optimistic about seeing positive demand growth in the second quarter of fiscal 2012. However it should be aware of the tough competition prevalent in the industry. Ominous rivals here include Bluelinx Holdings Inc. , Builders FirstSource Inc. (BLDR - Snapshot Report), and Louisiana-Pacific Corp. (LPX - Snapshot Report).
The current Zacks Consensus Estimates for Universal Forest is 68 cents for the second quarter of 2012 and $1.39 for fiscal 2012. The company currently retains a Zacks #1 Rank, which translates into a short-term Strong-Buy rating. We maintain a long-term Neutral recommendation on the stock.