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UFP Industries (UFPI) Gains 35% in a Year: More Room to Run?
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UFP Industries, Inc. (UFPI - Free Report) stock jumped 35.3% in the past year, strongly outperforming the Zacks Building Products - Wood industry’s rise of 6.8%. This wood and materials provider has benefited from its product and service enhancements and innovation investments.
The company reported tepid second-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate. Due to ongoing economic uncertainty, persisting inflation and high interest rates, the declining housing demand affected the company’s performance.
Nonetheless, its emphasis on innovation, efficiencies, and value-added solutions helped in margin expansion in the reported quarter. Although new housing starts fluctuated throughout the quarter, the company witnessed strong demand in most of the markets it operates in. The company remains focused on expanding its business through new products and acquisitions on the back of strong cash-flow generation and balance sheet position.
Image Source: Zacks Investment Research
Let dig into the factors substantiating its growth trajectory.
Product Innovation to Drive Growth: New product development is an integral part of UFPI's strategic plan for its business units. In second-quarter 2023, new product sales as a percent of total sales rose to 9% from 7% year over year. The company anticipates new product sales to be $795 million in 2023.
In the Retail Solutions segment, UFPI is expanding its DecKorators product development team to accelerate innovation in the market, leveraging its patented mineral-based technology with substantial growth prospects.
The company's investments in innovation and acceleration are poised to yield greater results in the upcoming periods. For 2023, over 10 of its new product categories are each expected to generate more than $20 million in sales.
Strategic Acquisitions: Acquisitions have been UFP Industries' preferred mode of solidifying its product portfolio and leveraging new business opportunities. Although the company has not made any acquisitions in the first half of 2023, it is benefiting from its previous buyouts. In second-quarter 2023, acquisitions contributed 2% to unit sales growth. UFP anticipates total capital expenditures of $175-$200 million in 2023. Also, it projects acquisitions to contribute half of its total annual unit sales growth.
Strong Balance Sheet: UFP Industries has been maintaining a strong liquidity position to navigate through the current environment. The company had $2 billion of liquidity as of Jul 1, 2023, including $535 million of remaining availability under the revolving credit facility and a shelf agreement with certain lenders.
Cash and cash equivalents were $702.1 million as of Jun 2023-end compared with $138.1 million a year ago and $559.4 million at fiscal 2022 end. The current liquidity level is sufficient to meet the short-term obligation of $2.39 million.
Zacks Rank & Key Picks
UFP Industries currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Construction sector are:
The Zacks Consensus Estimate for BCC’s 2023 sales and earnings per share (EPS) indicates a decline of 20.1% and 45.5%, respectively, from the year-ago period’s levels.
EMCOR Group, Inc. (EME - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 17.2%, on average. Shares of EME have risen 89% in the past year.
The Zacks Consensus Estimate for EME’s 2023 sales and EPS suggests growth of 11.5% and 35.9%, respectively, from the year-ago period’s levels.
TopBuild Corp. (BLD - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 14.1%, on average. Shares of BLD have surged 56.1% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gains of 3.3% and 6.1%, respectively, from the year-ago period’s levels.
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UFP Industries (UFPI) Gains 35% in a Year: More Room to Run?
UFP Industries, Inc. (UFPI - Free Report) stock jumped 35.3% in the past year, strongly outperforming the Zacks Building Products - Wood industry’s rise of 6.8%. This wood and materials provider has benefited from its product and service enhancements and innovation investments.
The company reported tepid second-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate. Due to ongoing economic uncertainty, persisting inflation and high interest rates, the declining housing demand affected the company’s performance.
Nonetheless, its emphasis on innovation, efficiencies, and value-added solutions helped in margin expansion in the reported quarter. Although new housing starts fluctuated throughout the quarter, the company witnessed strong demand in most of the markets it operates in. The company remains focused on expanding its business through new products and acquisitions on the back of strong cash-flow generation and balance sheet position.
Image Source: Zacks Investment Research
Let dig into the factors substantiating its growth trajectory.
Product Innovation to Drive Growth: New product development is an integral part of UFPI's strategic plan for its business units. In second-quarter 2023, new product sales as a percent of total sales rose to 9% from 7% year over year. The company anticipates new product sales to be $795 million in 2023.
In the Retail Solutions segment, UFPI is expanding its DecKorators product development team to accelerate innovation in the market, leveraging its patented mineral-based technology with substantial growth prospects.
The company's investments in innovation and acceleration are poised to yield greater results in the upcoming periods. For 2023, over 10 of its new product categories are each expected to generate more than $20 million in sales.
Strategic Acquisitions: Acquisitions have been UFP Industries' preferred mode of solidifying its product portfolio and leveraging new business opportunities. Although the company has not made any acquisitions in the first half of 2023, it is benefiting from its previous buyouts. In second-quarter 2023, acquisitions contributed 2% to unit sales growth. UFP anticipates total capital expenditures of $175-$200 million in 2023. Also, it projects acquisitions to contribute half of its total annual unit sales growth.
Strong Balance Sheet: UFP Industries has been maintaining a strong liquidity position to navigate through the current environment. The company had $2 billion of liquidity as of Jul 1, 2023, including $535 million of remaining availability under the revolving credit facility and a shelf agreement with certain lenders.
Cash and cash equivalents were $702.1 million as of Jun 2023-end compared with $138.1 million a year ago and $559.4 million at fiscal 2022 end. The current liquidity level is sufficient to meet the short-term obligation of $2.39 million.
Zacks Rank & Key Picks
UFP Industries currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Construction sector are:
Boise Cascade Company (BCC - Free Report) sports a Zacks Rank #1 (Strong Buy). BCC has a trailing four-quarter earnings surprise of 25.5% on average. Shares of BCC have gained 71.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BCC’s 2023 sales and earnings per share (EPS) indicates a decline of 20.1% and 45.5%, respectively, from the year-ago period’s levels.
EMCOR Group, Inc. (EME - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 17.2%, on average. Shares of EME have risen 89% in the past year.
The Zacks Consensus Estimate for EME’s 2023 sales and EPS suggests growth of 11.5% and 35.9%, respectively, from the year-ago period’s levels.
TopBuild Corp. (BLD - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 14.1%, on average. Shares of BLD have surged 56.1% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gains of 3.3% and 6.1%, respectively, from the year-ago period’s levels.