Universal Forest Products Inc. (UFPI) is moving higher as analysts upgrade earnings forecasts in anticipation of a housing bottom.

Company Description

Universal Forest Products, Inc. engages in the engineering, treatment and distribution of lumber, composite wood and plastic to “do-it yourself” to retail and industrial markets in the United States. The company was founded in 1955 and has a market cap of $839 million.

With stocks rallying and the down trodden housing market showing signs of life, materials companies have been advancing on optimism and higher estimates. Universal’s second-quarter results, reported on July 15, were down from last year, but still beat estimates.

Second-Quarter Results

Sales were down 27% from last year to $514.9 million. Income came in at $16.1 million, producing earnings of 83 cents per share, blowing past the Zacks consensus estimate of 43 cents.

Cost Cutting

In order to combat the drop in sales, the company aggressively cut costs, which were down 9% to $56 million.

Estimates Spike

With general optimism afloat in the economy, and specifically the housing sector, estimates have been on the upswing. The current year has more than doubled in the last 90 days Incorporatedreasing to 97 cents per share. The next year estimate is bullish, pegged at $1.24, a 27% earnings growth projection.

The Chart

As previously mentioned, shares of UFPI have more than doubled in the last 3 months as the market eyes an end to the housing slump. Shares reacted nicely to the solid earnings report, gapping open higher before leveling off. Take a look below.

Zacks Investment Research
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