Why Universal Forest Products' Shares Popped
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 building products company Universal Forest Products (NAS: UFPI) were shooting up today, gaining as much as 15% in intraday trading.
So what: It's earnings season and that means many of the big moves in the market are stemming from better- or worse-than-expected earnings reports. Lucky for UFPI shareholders, the surprise in the company's first quarter was an upside surprise.
For the quarter, UFPI managed to beat analysts' estimates on both the top and bottom lines. Sales for the quarter were $457 million, up 18% from 2011 and better than Wall Street's $421 million estimate. On the bottom line, earnings per share clocked in at $0.21, reversing a loss from last year and clobbering analysts' expected $0.03 per share.
Now what: UFPI's business looked strong across the board. Industrial packaging sales were up 21% from a year ago, while manufactured housing revenue jumped 34%. Retail building products, which sell into do-it-yourself retailers like Home Depot (NYS: HD) (which accounted for 23% of UFPI's 2011 sales), had a somewhat more tepid 12% year-over-year advance, but that's nothing to sneeze at either. Not surprisingly, the only segment of the company's business that didn't post double-digit, year-over-year sales growth was residential construction. That business gained roughly 9%, but it's also one of the smaller contributors to UFPI's total business.
In sum, the results from UFPI showed solid growth in all of its markets. Obviously the continuation of those trends will depend a lot on the economy, but there's good reason for investors to be happy with today's report.
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