Why Universal Forest Products' Shares Dropped

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 (NAS: 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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The article Why Universal Forest Products' Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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