Back to top

Universal Forest Products, Inc.

Read MoreHide Full Article

Shares of Universal Forest Products, Inc. (UFPI - Free Report) 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.

This Week's Momentum Zacks Rank Buy Stocks

Shares of Everest Re Group Ltd. (RE) hit its 52-week high on May 11, 2012 after reporting strong first quarter results, which included a 28% earnings surprise. Rebounding from sequential as well as year-ago losses, this Zacks #1 Rank (Strong Buy) property & casualty insurer has now reached the momentum radar. Read the full article.

Vitamin Shoppe, Inc. (VSI) shares have rocketed 41% in the past 6 months as this retailer of vitamin and feel good healthcare products gained from improved consumer confidence. On May 8, the company reported first-quarter earnings per share that beat the Zacks Consensus Estimate while climbing 30% from last year. Read the full article.

Texas Capital BancShares Inc. (TCBI) has been on a roll for the last several months, hitting a number of new all-time highs and jumping more than 70% since October 2011. With first-quarter EPS growth of 126% year-over-year and a long-term growth projection of about 10%, this regional banking stock has plenty of momentum. Read the full article.

Saia Inc. (SAIA) shares have soared nearly 78% in the last 6 months, as this trucking company hitches up to the economic recovery. Late April saw a strong first-quarter report for this Zacks #1 Rank (Strong Buy) that included a positive EPS surprise of 100% and double digit revenue growth, leading to upward earnings estimate revisions in the past week. Read the full article.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Universal Forest Products, Inc. (UFPI) - free report >>

More from Zacks Momentum

You May Like