It was all working so well. I figured I'd just sit back and watch Universal Forest Products (NASDAQ:UFPI) for a few more quarters, then pick up the shares on some homebuilding or construction panic. Then the company's financial performance blew the doors off expectations yet again.
Let this be a lesson, fellow Fools: Underestimate well-run companies at your own peril.
Revenue in this first quarter came in 24% higher year over year. Yeah, 24% -- there are small-cap tech stocks that can't manage that. Margins also improved once again, and operating income jumped 71% from the year-ago period. Happily, most of that made it through to the bottom line, where earnings per share were up about 67%.
Everywhere you look, it's growth, growth, growth. Well, mostly. The manufactured housing business saw revenue rise "only" 10%, but this was despite a 4% decline in prices, and this business is only about one-fifth of the total. Elsewhere, the DIY business was up 20%, the site-built construction market was up 39%, and the industrial business was up almost 22%.
I don't necessarily think that the growth is about to come to a screeching halt. The retail business (which includes customers such as Lowe's (NYSE:LOW) and Home Depot (NYSE:HD)) is at least somewhat protected by contracts. As for construction and industrial, there's still ample opportunity for more market-share growth, which would help offset any market slowdowns, should they occur.
I know there are expectations for housing construction to slow, and industrial activity will also decline at some point. But I'll be darned if I know precisely when. In the meantime, don't overlook the chance that this company will produce better margins, expand into new but complementary markets, and garner even more market share. So while even my revised valuation model doesn't yell "buy" to me today, I've already missed an 80%-plus move waiting for a price that would be "just a little cheaper."
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
