Please ensure Javascript is enabled for purposes of website accessibility

Why Universal Forest Shares Popped

By Brian D. Pacampara, CFA - Apr 18, 2013 at 3:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful? Or just another movement?

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 wood products manufacturer Universal Forest Products (UFPI 2.39%) climbed as high as 13.6% today after its quarterly results topped Wall Street expectations.

So what: The stock has plunged over the past month on concerns over construction and housing demand, but a better than expected first quarter -- EPS of $0.26 on revenue growth of 21% -- naturally eases some of those worries. In fact, the report is one of the best first quarters Universal has ever posted, driven by strong sales efforts, share gains in some segments, and a rising lumber market.

Now what: Don't let today's pop prevent you from looking into the stock. "We're encouraged by the fact that our operating results were strong in spite of less-than-expected same-store unit sales to our do-it-yourself retail customers and lower margins in certain framing operations as a result of rapid cost increases that we could not pass on to customers," said CEO Matthew Missad. "We expect improved performance in each of these areas for subsequent quarters." More important, with the stock still off about 16% from its 52-week highs and trading at a reasonable forward P/E of 14, there might be some room left to profit from that improvement.

Interested in more info Universal Forest? Add it to your watchlist.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Universal Forest Products, Inc. Stock Quote
Universal Forest Products, Inc.
$78.90 (2.39%) $1.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.