We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UFP Industries' (UFPI) Buyouts Bode Well Amid Lumber Woes
Read MoreHide Full Article
UFP Industries, Inc. (UFPI - Free Report) has been exploring new markets and enhancing its product portfolio through regular buyouts as well as innovative products. Solid U.S. residential market, strong demand for repair and remodeling activities along with a stable balance sheet bode well.
In the year-to-date period, its shares have gained 33.7%, outperforming the Zacks Building Products - Wood industry’s 18.7% rally. The outperformance can primarily be attributed to the company’s solid earnings surprise history. UFP Industries’ earnings surpassed the Zacks Consensus Estimate in nine of the trailing 10 quarters.
Earnings estimates for 2021 have moved up 15.6% over the past 60 days, indicating an 83.3% year-over-year growth. This trend signifies bullish analyst sentiments, indicating robust fundamentals and the expectation of further outperformance in the near term.
Image Source: Zacks Investment Research
Yet, declining lumber prices, higher material, labor and transportation costs along with declining DIY demand are pressing concerns for this Zacks Rank #3 (Hold) company. These headwinds are compelling investors to hold the stock for a while despite robust fundamentals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Driving Growth
UFP Industries has been following a systematic inorganic strategy to expand market reach, boost profitability and strengthen its product portfolio. On Apr 29, UFP Industries announced that one of its subsidiaries has acquired Minneapolis, MN-based Endurable Building Products, LLC.
Apart from accretive acquisitions, the company is poised to benefit from rising demand for repair and remodeling activities in the quarters ahead. UFP Industries’ continuous efforts to introduce new products will also likely give a boost to its performance. For the first and second quarters of 2021, new product sales grew an impressive 58% and 61% year over year, respectively. In June, it launched an innovation accelerator initiative that will help UFP Industries identify new product opportunities, rapidly design prototype and test them to increase the company’s speed to market. Encouragingly, it remains focused on achieving annual new product sales of at least $548 million in 2021.
Declining mortgage rates have been driving the U.S. residential market of late. Also, with more work-from-home and stay-at-home orders amid the pandemic, demand for repair and remodeling activities has increased many folds over the last few quarters. Greater-than-expected demand for home improvement products has been benefiting the company. This has been a boon for UFP Industries and companies like Louisiana-Pacific Corporation (LPX - Free Report) , Rayonier Inc. (RYN - Free Report) and Weyerhaeuser Company (WY - Free Report) in the Zacks Building Products – Wood industry.
These factors are allowing UFP Industries to reward its stockholders and maintain financial position. The company keeps on distributing dividends over the past several years on the back of a stable balance sheet. In second-quarter 2021, it paid $9 million dividends, reflecting an increase of 20% year over year. The company ended second-quarter 2021 with approximately $288 million liquidity, including $44.3 million cash and cash equivalents.
Concerns
After record high lumber prices until the first half of the second quarter, the market started declining gradually. Although increasing lumber prices benefited the Retail segment, the same hurt Industrial and Construction segments. A totally different situation is expected to be seen in second-half 2021, wherein falling lumber prices are likely to impact the Retail segment heavily.
DIY demand also remained soft as professionals are still very busy, while others are enjoying vacations and travel. The company is also witnessing higher material and labor costs. Deckorators are also witnessing higher resin and transportation costs.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
UFP Industries' (UFPI) Buyouts Bode Well Amid Lumber Woes
UFP Industries, Inc. (UFPI - Free Report) has been exploring new markets and enhancing its product portfolio through regular buyouts as well as innovative products. Solid U.S. residential market, strong demand for repair and remodeling activities along with a stable balance sheet bode well.
In the year-to-date period, its shares have gained 33.7%, outperforming the Zacks Building Products - Wood industry’s 18.7% rally. The outperformance can primarily be attributed to the company’s solid earnings surprise history. UFP Industries’ earnings surpassed the Zacks Consensus Estimate in nine of the trailing 10 quarters.
Earnings estimates for 2021 have moved up 15.6% over the past 60 days, indicating an 83.3% year-over-year growth. This trend signifies bullish analyst sentiments, indicating robust fundamentals and the expectation of further outperformance in the near term.
Image Source: Zacks Investment Research
Yet, declining lumber prices, higher material, labor and transportation costs along with declining DIY demand are pressing concerns for this Zacks Rank #3 (Hold) company. These headwinds are compelling investors to hold the stock for a while despite robust fundamentals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Driving Growth
UFP Industries has been following a systematic inorganic strategy to expand market reach, boost profitability and strengthen its product portfolio. On Apr 29, UFP Industries announced that one of its subsidiaries has acquired Minneapolis, MN-based Endurable Building Products, LLC.
Apart from accretive acquisitions, the company is poised to benefit from rising demand for repair and remodeling activities in the quarters ahead. UFP Industries’ continuous efforts to introduce new products will also likely give a boost to its performance. For the first and second quarters of 2021, new product sales grew an impressive 58% and 61% year over year, respectively. In June, it launched an innovation accelerator initiative that will help UFP Industries identify new product opportunities, rapidly design prototype and test them to increase the company’s speed to market. Encouragingly, it remains focused on achieving annual new product sales of at least $548 million in 2021.
Declining mortgage rates have been driving the U.S. residential market of late. Also, with more work-from-home and stay-at-home orders amid the pandemic, demand for repair and remodeling activities has increased many folds over the last few quarters. Greater-than-expected demand for home improvement products has been benefiting the company. This has been a boon for UFP Industries and companies like Louisiana-Pacific Corporation (LPX - Free Report) , Rayonier Inc. (RYN - Free Report) and Weyerhaeuser Company (WY - Free Report) in the Zacks Building Products – Wood industry.
These factors are allowing UFP Industries to reward its stockholders and maintain financial position. The company keeps on distributing dividends over the past several years on the back of a stable balance sheet. In second-quarter 2021, it paid $9 million dividends, reflecting an increase of 20% year over year. The company ended second-quarter 2021 with approximately $288 million liquidity, including $44.3 million cash and cash equivalents.
Concerns
After record high lumber prices until the first half of the second quarter, the market started declining gradually. Although increasing lumber prices benefited the Retail segment, the same hurt Industrial and Construction segments. A totally different situation is expected to be seen in second-half 2021, wherein falling lumber prices are likely to impact the Retail segment heavily.
DIY demand also remained soft as professionals are still very busy, while others are enjoying vacations and travel. The company is also witnessing higher material and labor costs. Deckorators are also witnessing higher resin and transportation costs.