Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Universal Forest Products Inc. Jumped

By Jeremy Bowman - Feb 13, 2014 at 4:01PM

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 Universal Forest Products (UFPI -2.49%) were looking hardy today, gaining as much as 15% after a strong fourth-quarter earnings report.

So what: The wood-products maker said sales grew 11.7% to $525.7 million, in line with estimates, while earnings swung from a $0.10 per-share loss in the year-ago quarter to a $0.40 per-share profit, much better than estimates at $0.17. In a press release, CEO Matthew Missad credited "much improved performance in housing and construction and a high and steadily rising lumber market" for enabling greater capacity and operating leverage, which led to the surge in profit. Unit sales were up 5%, and gross margin improved 280 points to 12.25%.

Now what: The company has now solidly beaten earnings estimates in four straight quarters. Given the improvements in lumber prices and the continuing upward outlook in the housing market, I'd expect Universal Products' prospects to keep improving. Look for analysts to bump up their estimates, which could make shares look like a bargain as this company seems to be one of the more overlooked housing recovery plays on the market.

 

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.
UFPI
$75.58 (-2.49%) $-1.93

*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
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

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.