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UFP Industries (UFPI) Up 15.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have added about 15.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is UFP Industries due for a pullback? 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 drivers.
UFP Industries’ Q3 Earnings & Net Sales Miss, Down Y/Y
UFP Industries reported tepid results for third-quarter 2023, wherein earnings and revenues missed the Zacks Consensus Estimate and declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Despite a tough year-over-year comparison, UFPI's emphasis on innovation, efficiencies and value-added solutions helped in margin expansion. The company remains focused on expanding its business through new products and acquisitions on the back of strong cash flow generation and a solid balance sheet position.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $2.10 per share, which missed the consensus mark of $2.13 by 1.4% and decreased 21.1% from the year-ago level of $2.66.
Net sales of $1.83 billion also lagged the consensus mark of $2.28 billion by 10.2% and declined 21% year over year. The decline is mainly due to a 12% fall in prices and a 9% decrease in unit sales.
New product sales accounted for 9.7%, up from 7.8% reported a year ago.
Segment Discussion
UFP Retail Solutions: The segment reported net sales of $711.4 million for the quarter, which declined 16% year over year due to a 9% decline in selling prices and 7% lower organic unit sales. Adjusted EBITDA margin rose 340 basis points (bps) from the prior year to 7.6%. The improvement is primarily backed by variable-priced products such as ProWood-treated lumber.
UFP Packaging: The Packaging segment’s net sales totaled $449.9 million, reflecting a decline of 23% from the year-ago period. For the quarter, selling prices decreased by 16% and organic unit sales were down by 9% year over year, partly offset by a 2% increase in sales from acquisitions.
On a year-over-year basis, value-added sales and new product sales, as a percent of total net sales, increased to 76% and 16.1% from 74% and 11.5%, respectively.
Adjusted EBITDA margin fell 350 bps from the prior year to 11.9% due to competitive price pressure and lower volume.
UFP Construction: Net sales in the segment were $584 million, down 25% year over year. This decline was mainly due to a 13% decline in organic unit sales and a 12% decline in selling prices. Adjusted EBITDA margin contracted 170 bps from the prior year to 13.2%, mainly due to more normalized market pricing and a decrease in volume owing to the decline in housing starts and in the production of manufactured homes.
Operating Highlights
During the third quarter, selling, general and administrative expenses — accounting for 10.7% of net sales — increased 150 bps year over year.
Adjusted EBITDA of $208 million reduced by 24% year over year. Adjusted EBITDA margin also contracted 40 bps from the prior year to 11.4%.
Balance Sheet & Cash Flow
The company ended third-quarter 2023 with $2.2 billion in liquidity. Cash and cash equivalents were $957.2 million at the third-quarter end compared with $559.4 million at 2022-end. At Sep 30, 2023-end, net cash from operating activities was $711.8 million compared with $533 million in the corresponding year-ago period.
During the first nine months of 2023, UFPI repurchased 766,812 shares at an average price of $80.95 under the share repurchase plan. On Jul 26, its board of directors authorized up to $200 million for share repurchases through Jul 31, 2024. Of this authorization, $179 million was remaining at the third quarter’s end.
The company anticipates $175-200 million in capital expenditures in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.44% due to these changes.
VGM Scores
Currently, UFP Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UFP Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
UFP Industries belongs to the Zacks Building Products - Wood industry. Another stock from the same industry, Weyerhaeuser (WY - Free Report) , has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Weyerhaeuser reported revenues of $2.02 billion in the last reported quarter, representing a year-over-year change of -11.2%. EPS of $0.33 for the same period compares with $0.42 a year ago.
Weyerhaeuser is expected to post earnings of $0.17 per share for the current quarter, representing a year-over-year change of -29.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -28.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Weyerhaeuser. Also, the stock has a VGM Score of D.
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UFP Industries (UFPI) Up 15.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have added about 15.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is UFP Industries due for a pullback? 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 drivers.
UFP Industries’ Q3 Earnings & Net Sales Miss, Down Y/Y
UFP Industries reported tepid results for third-quarter 2023, wherein earnings and revenues missed the Zacks Consensus Estimate and declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Despite a tough year-over-year comparison, UFPI's emphasis on innovation, efficiencies and value-added solutions helped in margin expansion. The company remains focused on expanding its business through new products and acquisitions on the back of strong cash flow generation and a solid balance sheet position.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $2.10 per share, which missed the consensus mark of $2.13 by 1.4% and decreased 21.1% from the year-ago level of $2.66.
Net sales of $1.83 billion also lagged the consensus mark of $2.28 billion by 10.2% and declined 21% year over year. The decline is mainly due to a 12% fall in prices and a 9% decrease in unit sales.
New product sales accounted for 9.7%, up from 7.8% reported a year ago.
Segment Discussion
UFP Retail Solutions: The segment reported net sales of $711.4 million for the quarter, which declined 16% year over year due to a 9% decline in selling prices and 7% lower organic unit sales.
Adjusted EBITDA margin rose 340 basis points (bps) from the prior year to 7.6%. The improvement is primarily backed by variable-priced products such as ProWood-treated lumber.
UFP Packaging: The Packaging segment’s net sales totaled $449.9 million, reflecting a decline of 23% from the year-ago period. For the quarter, selling prices decreased by 16% and organic unit sales were down by 9% year over year, partly offset by a 2% increase in sales from acquisitions.
On a year-over-year basis, value-added sales and new product sales, as a percent of total net sales, increased to 76% and 16.1% from 74% and 11.5%, respectively.
Adjusted EBITDA margin fell 350 bps from the prior year to 11.9% due to competitive price pressure and lower volume.
UFP Construction: Net sales in the segment were $584 million, down 25% year over year. This decline was mainly due to a 13% decline in organic unit sales and a 12% decline in selling prices.
Adjusted EBITDA margin contracted 170 bps from the prior year to 13.2%, mainly due to more normalized market pricing and a decrease in volume owing to the decline in housing starts and in the production of manufactured homes.
Operating Highlights
During the third quarter, selling, general and administrative expenses — accounting for 10.7% of net sales — increased 150 bps year over year.
Adjusted EBITDA of $208 million reduced by 24% year over year. Adjusted EBITDA margin also contracted 40 bps from the prior year to 11.4%.
Balance Sheet & Cash Flow
The company ended third-quarter 2023 with $2.2 billion in liquidity. Cash and cash equivalents were $957.2 million at the third-quarter end compared with $559.4 million at 2022-end. At Sep 30, 2023-end, net cash from operating activities was $711.8 million compared with $533 million in the corresponding year-ago period.
During the first nine months of 2023, UFPI repurchased 766,812 shares at an average price of $80.95 under the share repurchase plan. On Jul 26, its board of directors authorized up to $200 million for share repurchases through Jul 31, 2024. Of this authorization, $179 million was remaining at the third quarter’s end.
The company anticipates $175-200 million in capital expenditures in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.44% due to these changes.
VGM Scores
Currently, UFP Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UFP Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
UFP Industries belongs to the Zacks Building Products - Wood industry. Another stock from the same industry, Weyerhaeuser (WY - Free Report) , has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Weyerhaeuser reported revenues of $2.02 billion in the last reported quarter, representing a year-over-year change of -11.2%. EPS of $0.33 for the same period compares with $0.42 a year ago.
Weyerhaeuser is expected to post earnings of $0.17 per share for the current quarter, representing a year-over-year change of -29.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -28.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Weyerhaeuser. Also, the stock has a VGM Score of D.