Will Universal Forest (UFPI) Post Upbeat Results This Quarter? - Analyst Blog

Universal Forest Products, Inc. UFPI, an active player in the lumber supply industry, is expected to report its first-quarter 2014 results on Apr 17. The company's performances in the trailing four quarters were above expectations as evidenced by a positive average earnings surprise of 661.69%. Let us see how things are shaping up for this announcement and whether Universal Forest Products will be able to keep its earnings beat streak alive.

Factors to Influence Q1 Results

We believe Universal Forest Products has compelling top-line growth prospects. The company will reap benefits from addition of new customers and products to its portfolio. Also, the company's focus on expansion through development of industrial business, entry into markets without adding capacities and accretive acquisitions are expected to be a boon.

Universal Forest Products' Retail building material unit will benefit from increase in home improvement spending while the Industrial packaging unit will gain from expansion of non-wood packaging materials business. The Construction business will be strengthened from addition of products and expansion of distribution capacities in the Manufactured Housing business, favorable national housing starts in the Residential Construction business and business expansion in the Commercial Construction and Concrete Forming business.

In the past 5 years, Universal Forest Products' earnings grew 14.2%, while it is expected to grow 10.0% as against 6.4% for the industry in the next 5 years.

Yet, bad weather conditions experienced at the onset of the quarter might impact top-line results. Also, any increases in costs of sales due to an unusual rise in cost of lumber products purchased from primary producers, will adversely impact first-quarter 2014 financial results.

Earnings Whispers?

Our proven model does not conclusively show that Universal Forest Products is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Universal Forest Products has an ESP of -18.61% for first-quarter 2014, which indicates the difference between the Most Accurate estimate of 35 cents and the Zacks Consensus Estimate of 43 cents.

Zacks Rank: Universal Forest Products' Zacks Rank #3 (Hold) when combined with a nagative ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

KB Home KBH with Earnings ESP of +4.76% and a Zacks Rank #3.

Builders FirstSource, Inc. BLDR with Earnings ESP of +100.0% and a Zacks Rank #3.

Fastenal Company FAST with Earnings ESP of +4.55% and a Zacks Rank #3.