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UFP Industries (UFPI) Forges Ahead: Be Part of the Rally
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UFP Industries, Inc.’s (UFPI - Free Report) shares have been riding high since the release of its second-quarter 2022 results. Ever since this Zacks Rank #2 (Buy) company reported quarterly numbers on Jul 21, its shares have risen 17.7%, outperforming the industry’s growth of 3.1%. In fact, the company’s shares have gained 18.4% over the past three months, outperforming the industry’s 1.3% decline.
Continued activity in commercial and infrastructure end markets within the construction segment, diverse end markets and acquisitions have been helping the company to navigate new external challenges, including rising interest rates and historically high inflation.
We believe that UFP Industries offers a sound investment opportunity, as evident from its VGM Score of “A”.
The Zacks Consensus Estimate has witnessed an uptrend over the past 30 days as analysts raised their estimates. Over the said time frame, the Zacks Consensus Estimate of $10.56 and $9.33 for 2022 and 2023 has increased $1.41 and $1.43, respectively.
Image Source: Zacks Investment Research
Let’s take a look at the factors supporting the growth.
Diverse End-Markets: The company serves various end markets from more than 200 locations worldwide. This diversified approach has helped the company to mitigate challenges through the years that includes the latest new external risks like rising interest rates and high inflation. In the near term, the company expects continued improvement in the Industrial and Construction segments. It also expects more normalized demand in its largest segment, Retail Solutions. UFP Industries’ diversified business and end markets will likely successfully navigate various market environments and deliver impressive returns to shareholders.
Continued Improvements in Construction & Industrial: Construction segment sales were up 32% year over year. This improvement in the segment sales is mainly attributable to a 15% increase in selling price, an 15% rise in organic unit growth and 2% growth from the transfer of certain sales from the retail segment. Organic unit growth was driven by a 63% increase in commercial, a 35% increase in concrete forming and 16% in factory-built housing. Meanwhile, the Industrial segment continues to perform well as PalletOne has been improving sourcing manufacturing and is expanding geographically within the UFP footprint. Again, the latest combination with Dempsey Forest Products provides added opportunity to create efficiencies in the supply chain. Instructional packaging or national sales team continues to gain business and drive more sales with national accounts.
Acquisitions: UFP Industries has been following a systematic inorganic strategy to expand market reach, boost profitability and strengthen its product portfolio. UFPI acquired nine companies in 2021 and five in 2020. Acquisitions contributed 24% to unit sales growth in 2021. In the first and second quarters of 2022, UFPI recorded a 7% and 1% increase, respectively, in unit sales from acquisitions. Acquisitions also contributed $12 million and $3.5 million to adjusted EBITDA and $10 million and $2.5 million to earnings, respectively, in the first and the second quarters.
Solid ROE & Higher Earnings Growth Rate: URI’s superior return on equity (ROE) is also indicative of its growth potential. The company’s ROE currently stands at 30.8%, higher than the industry’s 27.3%. This indicates efficiency in using shareholders’ funds and the ability to generate profit with minimum capital usage.
The Zacks Consensus Estimate for 2022 earnings of $10.56 per share implies 22.9% year-over-year growth. The solid growth rate depicts the stock's promising future.
3 Top-Ranked Construction Stocks Hogging the Limelight
Arcosa — sporting a Zacks Rank #1 — is a manufacturer of infrastructure-related products and services which serves construction, energy and transportation markets.
ACA’s expected earnings growth rate for fiscal 2022 is 7.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.7% over the past 30 days.
United Rentals — currently carrying a Zacks Rank #1 — is the largest equipment rental company in the world.
URI’s expected earnings growth rate for 2022 is 43.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 30 days.
Primoris — a Zacks Rank #2 company — is a specialty contractor company operating in the United States and Canada. A robust backlog level of more than $4 billion and solid contract awards in the Energy/Renewables and Utilities segments depict incredible momentum in the future despite the supply chain and permitting challenges. Utility-scale solar projects continued to drive the progress of the Energy/Renewables segment.
Primoris’ earnings for 2022 are expected to grow by 18.4%.
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UFP Industries (UFPI) Forges Ahead: Be Part of the Rally
UFP Industries, Inc.’s (UFPI - Free Report) shares have been riding high since the release of its second-quarter 2022 results. Ever since this Zacks Rank #2 (Buy) company reported quarterly numbers on Jul 21, its shares have risen 17.7%, outperforming the industry’s growth of 3.1%. In fact, the company’s shares have gained 18.4% over the past three months, outperforming the industry’s 1.3% decline.
Continued activity in commercial and infrastructure end markets within the construction segment, diverse end markets and acquisitions have been helping the company to navigate new external challenges, including rising interest rates and historically high inflation.
We believe that UFP Industries offers a sound investment opportunity, as evident from its VGM Score of “A”.
The Zacks Consensus Estimate has witnessed an uptrend over the past 30 days as analysts raised their estimates. Over the said time frame, the Zacks Consensus Estimate of $10.56 and $9.33 for 2022 and 2023 has increased $1.41 and $1.43, respectively.
Image Source: Zacks Investment Research
Let’s take a look at the factors supporting the growth.
Diverse End-Markets: The company serves various end markets from more than 200 locations worldwide. This diversified approach has helped the company to mitigate challenges through the years that includes the latest new external risks like rising interest rates and high inflation. In the near term, the company expects continued improvement in the Industrial and Construction segments. It also expects more normalized demand in its largest segment, Retail Solutions. UFP Industries’ diversified business and end markets will likely successfully navigate various market environments and deliver impressive returns to shareholders.
Continued Improvements in Construction & Industrial: Construction segment sales were up 32% year over year. This improvement in the segment sales is mainly attributable to a 15% increase in selling price, an 15% rise in organic unit growth and 2% growth from the transfer of certain sales from the retail segment. Organic unit growth was driven by a 63% increase in commercial, a 35% increase in concrete forming and 16% in factory-built housing. Meanwhile, the Industrial segment continues to perform well as PalletOne has been improving sourcing manufacturing and is expanding geographically within the UFP footprint. Again, the latest combination with Dempsey Forest Products provides added opportunity to create efficiencies in the supply chain. Instructional packaging or national sales team continues to gain business and drive more sales with national accounts.
Acquisitions: UFP Industries has been following a systematic inorganic strategy to expand market reach, boost profitability and strengthen its product portfolio. UFPI acquired nine companies in 2021 and five in 2020. Acquisitions contributed 24% to unit sales growth in 2021. In the first and second quarters of 2022, UFPI recorded a 7% and 1% increase, respectively, in unit sales from acquisitions. Acquisitions also contributed $12 million and $3.5 million to adjusted EBITDA and $10 million and $2.5 million to earnings, respectively, in the first and the second quarters.
Solid ROE & Higher Earnings Growth Rate: URI’s superior return on equity (ROE) is also indicative of its growth potential. The company’s ROE currently stands at 30.8%, higher than the industry’s 27.3%. This indicates efficiency in using shareholders’ funds and the ability to generate profit with minimum capital usage.
The Zacks Consensus Estimate for 2022 earnings of $10.56 per share implies 22.9% year-over-year growth. The solid growth rate depicts the stock's promising future.
3 Top-Ranked Construction Stocks Hogging the Limelight
Other top-ranked stocks, which warrant a look in the Construction sector, include Arcosa (ACA - Free Report) , United Rentals (URI - Free Report) and Primoris Services Corporation (PRIM - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arcosa — sporting a Zacks Rank #1 — is a manufacturer of infrastructure-related products and services which serves construction, energy and transportation markets.
ACA’s expected earnings growth rate for fiscal 2022 is 7.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.7% over the past 30 days.
United Rentals — currently carrying a Zacks Rank #1 — is the largest equipment rental company in the world.
URI’s expected earnings growth rate for 2022 is 43.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 30 days.
Primoris — a Zacks Rank #2 company — is a specialty contractor company operating in the United States and Canada. A robust backlog level of more than $4 billion and solid contract awards in the Energy/Renewables and Utilities segments depict incredible momentum in the future despite the supply chain and permitting challenges. Utility-scale solar projects continued to drive the progress of the Energy/Renewables segment.
Primoris’ earnings for 2022 are expected to grow by 18.4%.