Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Universal Forest Products (Nasdaq: UFPI ) fell 15% today after the company released earnings.
So what: In the second quarter, revenue rose 9.1% to $593.7 million and net income quadrupled to $17.5 million, or $0.88 per share. Net income on an adjusted basis was $0.67, versus a $0.71 estimate, and revenue also fell short of estimates.
Now what: The company is growing at a nice clip and its businesses outside of retail building materials are performing very well. Still, shares are trading at over 54 times trailing earnings and 16 times forward earnings. I'd like to see more growth before jumping in, so I'll sit out the new discount today.
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Report this Comment On July 20, 2012, at 2:17 PM, ecm3131 wrote:
Nice to know, but you failed to answer the headline question: why did shares take a 15% haircut? Not because they are trading at 16 times forward earnings ... the multiple was even higher before the drop. Your reason for not buying more may be that you'd "like to see more growth", but how about a little analyisis?
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