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What's in Store for UFP Industries' (UFPI) Q4 Earnings?

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UFP Industries, Inc. UFPI, formerly known as Universal Forest Products, is scheduled to release fourth-quarter 2019 results on Feb 19, after the closing bell.

In the last reported quarter, the company’s earnings of 84 cents per share topped the Zacks Consensus Estimate by 7.7% but revenues of $1.16 billion missed the consensus mark by 1.5%. On a year-over-year basis, earnings improved 27.3% but revenues declined 4.1%.

UFP Industries reported better-than-expected earnings in three of the last four quarters, with the average positive surprise being 5%.

Trend in Estimate Revision

The Zacks Consensus Estimate for earnings per share for the quarter to be reported has been downwardly revised by 3.1% over the past 60 days to 62 cents. Nonetheless, this indicates an increase of 21.6% from the year-ago quarter.

Factors at Play

Declining lumber prices of various variations including southern yellow pine, spruce/pine/fir, and sheet/dimensional products like plywood and oriented strand board are expected to have hurt the company’s fourth-quarter sales.

That said, new and value-added sales mix and operating leverage are expected to have offset the above-mentioned impediments. Notably, new products have been an important driver for growth and margin improvement. Deckorators branded product sales, new product sales and an increase in demand in several existing product lines with a big-box customer have been driving the retail market’s unit sales. For the industrial market, acquisitions have been the major contributor to the unit sales growth. However, weaker demand is expected to have weighed on the segment’s revenues. Nonetheless, unit sales to the construction market have been benefiting from higher contribution from commercial and residential construction customers.

Overall, although rising labor costs and significant fluctuations in the lumber market are expected to negatively impact fourth-quarter results, the company is likely to have generated strong earnings on the back of solid new and value-added products growth.

Quantitative Model Prediction

Our proven model does not conclusively predict an earnings beat for UFP Industries this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Currently, it has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Release

Weyerhaeuser Company WY reported mixed fourth-quarter 2019 results, with earnings missing the Zacks Consensus Estimate, while net sales beating the same. The company reported adjusted earnings of 3 cents, which missed the consensus mark of 7 cents per share by 57.1% and declined 70% from the year-ago figure of 10 cents. Net sales during the quarter amounted to $1,548 million, beating the consensus mark of $1,524 million by 1.6%. However, the reported figure fell 5.4% from $1,636 million reported in the prior-year quarter.

Stocks With Favorable Combination

Here are a few construction stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:

Thor Industries, Inc. (THO - Free Report) has an Earnings ESP of +4.22% and a Zacks Rank #3.

Aspen Aerogels, Inc. ASPN has an Earnings ESP of +25.00% and carries a Zacks Rank #3.

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