Universal Forest (UFPI) AI Stock Analysis

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Universal Forest

(NASDAQ:UFPI)

Rating:74Outperform

Price Target:

$113.00

▲(16.05%Upside)

UFP Industries' strong financial position and strategic initiatives for growth are significant strengths, supported by a robust balance sheet and cash flow management. However, recent declines in revenue and free cash flow, coupled with bearish technical indicators, weigh on the overall score. Valuation remains neutral, and while corporate events suggest positive long-term prospects, immediate challenges in the market environment dampen the outlook.

Positive Factors

Market Expansion

Deckorators improves its launch pad, with plans to double its market share in the next few years, supported by $200M in capacity additions and a new Northeast plant expected to be fully operational by early FY26.

Operational Efficiency

Management has identified, and is already working toward, ~$60M in annual run rate improvements for EBITDA in FY26.

Sales Growth

Deckorators building momentum with a ~20% sales increase during the quarter as the Surestone technology continues to attract customers.

Negative Factors

Demand Challenges

Management’s outlook for 1H25 expects all three segments down slightly as soft demand and the resulting competitive pricing environment awaits a turnaround.

Earnings Performance

UFP Industries reported softer-than-expected 1Q25 results as margin pressures resulted in EBITDA and EPS falling short of Street estimates despite in-line revenue.

Pricing Competition

Increased pricing competition weighed on margins for the Site Built business already facing soft demand.

Universal Forest (UFPI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.86B

Dividend Yield1.38%

Average Volume (3M)485.86K

Price to Earnings (P/E)16.1

Beta (1Y)0.98

Revenue Growth-6.06%

EPS Growth-24.97%

CountryUS

Employees15,000

SectorBasic Materials

Sector Strength67

IndustryPaper, Lumber & Forest Products

Share Statistics

EPS (TTM)1.30

Shares Outstanding60,394,886

10 Day Avg. Volume355,489

30 Day Avg. Volume485,859

Financial Highlights & Ratios

PEG Ratio-1.62

Price to Book (P/B)1.81

Price to Sales (P/S)0.00

P/FCF Ratio19.59

Enterprise Value/Market Cap0.89

Enterprise Value/Revenue0.19

Enterprise Value/Gross Profit4.46

Enterprise Value/Ebitda1.90

Forecast

1Y Price Target

$123.33

Price Target Upside26.66% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

Universal Forest Business Overview & Revenue Model

Company DescriptionUFP Industries, Inc., through its subsidiaries, designs, manufactures, and markets wood and wood-alternative products in North America, Europe, Asia, and Australia. It operates through Retail, Industrial, and Construction segments. The Retail segment offers preserved and unpreserved dimensional lumber; and outdoor living products, including wood and wood composite decking and related accessories, decorative lawn, garden, craft, and hobby products. This segment serves national home center retailers, and retail-oriented regional and contractor-oriented lumberyards under the ProWood, ProWood FR, Deckorators, UFP-Edge, Outdoor Essentials, Dimensions, and Handprint trademarks. The Industrial segment provides pallets, specialty crates, wooden boxes, and other containers and products that are used for packaging, shipping, and material handling applications, as well as various other protective packaging applications. The construction segment offers roof trusses, cut and shaped lumbers, plywood, oriented strand boards, and dimensional lumbers; and engineered wood components, including roof and floor trusses, wall panels, I-joists, and lumber packages, as well as distributes siding, electrical, and plumbing products to factory-built housing and recreational vehicle customers. This segment also engages in the manufacture of components; design, manufacture, and supply of wood forms and related products to set or form concrete for structures, such as parking garages, stadiums, and bridges, as well as provides farming services for builders. It also offers interior fixtures, millwork, and casework for retail, commercial, and other structures; and structural wood packaging, other packing materials, and original equipment manufacturer components for various industries. The company was formerly known as Universal Forest Products, Inc. and changed its name to UFP Industries, Inc. in April 2020. UFP Industries, Inc. was founded in 1955 and is headquartered in Grand Rapids, Michigan.

How the Company Makes MoneyUFP Industries generates revenue through the manufacture and sale of a wide range of wood and wood-alternative products. The company's key revenue streams include retail sales of lumber and building materials to home improvement centers, sales of customized engineered wood products to the construction industry, and industrial packaging solutions. UFPI's earnings are bolstered by its strategic partnerships with major retailers and its ability to adapt to market demands by offering sustainable and innovative product solutions. Additionally, the company's vertically integrated supply chain helps in maintaining cost efficiencies and optimizing production capabilities.

Universal Forest Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: -8.31%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted a mix of strategic growth initiatives and robust cash reserves, yet was overshadowed by sales declines, margin pressures, and uncertainty in the market outlook. While there are promising developments in new product sales and M&A opportunities, immediate challenges in the core business segments persist.

Q1-2025 Updates

Positive Updates

Strong Cash Position

Finished the quarter with $905 million in cash, providing ample flexibility for future investments while maintaining a conservative capital structure.

New Product Sales Growth

New product sales totaled $106 million in the quarter, representing 6.7% of sales, with a pathway to reach 10% of sales over time. Surestone technology showcased potential growth opportunities.

M&A Pipeline and Growth Strategy

The M&A pipeline is better than recent years, providing opportunities for acquisitions in alignment with strategic growth objectives.

Capital Expansion Plans

Announced plans for a new Deckorators facility in the Northeast, part of a capital expansion plan aimed at doubling market share over time.

Negative Updates

Sales Decline

Total sales declined 3% from the previous year, impacted by lower volumes and competitive pricing pressures.

Earnings and Margins Pressure

Adjusted EBITDA declined 21% to $142 million, with margins pressured by unfavorable manufacturing variances and higher input costs.

Retail Segment Decline

Retail sales declined 3% due to a 4% decline in units, partially offset by a 1% price increase. Deckorators experienced an 11% decline due to a customer transition.

Packaging and Construction Segments Challenges

Packaging unit sales declined 2%, with challenges in structural packaging and pallet businesses. Construction sales were flat with a 3% decline in site-built units.

Uncertain Outlook

Visibility into the second half of 2025 remains challenged, with ongoing competitive pricing pressures and tariff uncertainties.

Company Guidance

During the Q1 2025 earnings call for UFP Industries Inc., the company provided detailed guidance on its financial and strategic outlook amidst a challenging macroeconomic environment. Total sales declined by 3% year-over-year, primarily due to a 2% reduction in volumes and a 1% decrease in selling prices, leading to an adjusted EBITDA of $142 million and an EBITDA margin of 8.9%. The company emphasized its focus on cost-out programs, aiming for $60 million in structural cost savings by 2026. New product sales totaled $106 million, representing 6.7% of total sales, with plans to expand this to 10% over time. UFP Industries ended the quarter with $905 million in cash, allowing for continued investment in growth and maintaining a conservative capital structure. The company committed to a balanced capital allocation strategy, including $1 billion in growth capital investments over the next five years, with a preference for M&A over greenfield expansion when valuations align. Despite ongoing market volatility, UFP Industries maintained its long-term targets of 7% to 10% unit growth and 12.5% EBITDA margins, while focusing on expanding its portfolio of value-add products and innovation to drive margins and shareholder value.

Universal Forest Financial Statement Overview

Summary

UFP Industries exhibits strong financial metrics with high profitability margins and a robust balance sheet, characterized by low leverage and high equity. Despite a significant decline in revenue and free cash flow, the company maintains operational efficiency and strong cash generation.

Income Statement

Positive

UFP Industries shows strong profitability with a high gross profit margin of 17.7% and a healthy net profit margin of 5.6% for TTM. However, revenue has declined over the past year from $9.63 billion to $6.61 billion, leading to a negative revenue growth rate of -31.3%. EBIT and EBITDA margins remain solid at 6.8% and 9.7%, respectively, indicating efficient operations.

Balance Sheet

Very Positive

The company maintains a robust balance sheet with a low debt-to-equity ratio of 0.07, suggesting low leverage and financial prudence. The return on equity stands at 11.4%, reflecting effective use of shareholder equity to generate income. A strong equity ratio of 78.5% highlights financial stability and low reliance on debt.

Cash Flow

Very Positive

UFP Industries demonstrates strong cash flow management with a free cash flow to net income ratio of 0.81, indicating that a substantial portion of net income is converted into free cash flow. The operating cash flow to net income ratio is notably high at 1.48, showcasing excellent cash-generating capabilities. However, free cash flow has decreased by 26.8% from the previous period.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
6.61B	6.65B	7.22B	9.63B	8.64B	5.15B
	Gross Profit
1.17B	1.23B	1.42B	1.79B	1.41B	800.30M
	EBIT
451.15M	492.24M	652.30M	950.18M	737.55M	345.83M
	EBITDA
642.19M	701.03M	815.97M	1.06B	835.69M	418.51M
	Net Income Common Stockholders
372.52M	414.56M	514.31M	692.65M	535.64M	246.78M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.02B	1.20B	1.15B	595.41M	323.16M	460.81M
	Total Assets
4.08B	4.15B	4.02B	3.67B	3.25B	2.40B
	Total Debt
409.85M	356.92M	384.30M	278.10M	337.28M	311.71M
	Net Debt
-570.66M	-814.91M	-734.03M	-281.30M	50.62M	-124.80M
	Total Liabilities
943.16M	900.95M	967.58M	1.07B	1.23B	921.74M
	Stockholders Equity
3.09B	3.22B	3.00B	2.60B	2.02B	1.48B
Cash Flow		Free Cash Flow
300.17M	410.30M	779.51M	657.44M	361.31M	247.29M
	Operating Cash Flow
550.56M	642.57M	959.89M	831.57M	512.48M	336.48M
	Investing Cash Flow
-290.24M	-270.75M	-240.16M	-353.94M	-611.19M	-154.72M
	Financing Cash Flow
-329.08M	-307.12M	-162.86M	-210.21M	-45.01M	85.22M

Universal Forest Technical Analysis

Technical Analysis Sentiment

Negative

Last Price97.37

Price Trends

50DMA

102.11

Negative

100DMA

106.71

Negative

200DMA

115.74

Negative

Market Momentum

MACD

-1.47

Negative

RSI

44.78

Neutral

STOCH

50.82

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UFPI, the sentiment is Negative. The current price of 97.37 is below the 20-day moving average (MA) of 98.89, below the 50-day MA of 102.11, and below the 200-day MA of 115.74, indicating a bearish trend. The MACD of -1.47 indicates Negative momentum. The RSI at 44.78 is Neutral, neither overbought nor oversold. The STOCH value of 50.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UFPI.

Universal Forest Risk Analysis

Universal Forest disclosed 17 risk factors in its most recent earnings report. Universal Forest reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Universal Forest Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HMY	78 Outperform	$9.53B	16.44	25.19%	0.93%	20.35%	20.44%
UFPI	74 Outperform	$5.86B	16.07	11.33%	1.38%	-6.06%	-24.97%
EMN	67 Neutral	$9.29B	10.25	16.16%	4.06%	2.78%	1.50%
BCC	65 Neutral	$3.29B	10.93	14.26%	0.95%	-4.67%	-35.04%
TX	58 Neutral	$5.56B	73.52	-2.75%	9.53%	-10.20%	-152.18%
X	58 Neutral	$12.17B	182.48	0.86%	0.37%	-14.79%	-88.78%
Sector *	51 Neutral	$2.02B	-1.12	-21.36%	3.65%	2.87%	-30.54%

* Basic Materials Sector Average

Performance Comparison

UFPI

Universal Forest

97.37

-16.44

-14.45%

EMN

Eastman Chemical

78.34

-19.32

-19.78%

HMY

Harmony Gold Mining

15.37

6.26

68.72%

Ternium SA

28.52

-8.84

-23.66%

United States Steel

52.96

14.83

38.89%

BCC

Boise Cascade

87.47

-38.47

-30.55%

Universal Forest Corporate Events

Business Operations and Strategy

UFP Industries Highlights Q1 2025 Strategic Growth Plans

Positive

Apr 30, 2025

UFP Industries‘ first quarter 2025 Investor Relations Presentation highlights the company’s strategic focus on driving above-market growth and improving margins. The company aims to achieve sustainable competitive advantages through diversification, innovation, and efficient capital allocation. UFP Industries plans to enhance its operations with automation and robotics, and expand its market presence through new products and strategic acquisitions, positioning itself for long-term financial growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.