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UFP Industries (UFPI)
NASDAQ:UFPI

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)

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
78
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
85
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
82
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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
6.61B6.65B7.22B9.63B8.64B5.15B
Gross Profit
1.17B1.23B1.42B1.79B1.41B800.30M
EBIT
451.15M492.24M652.30M950.18M737.55M345.83M
EBITDA
642.19M701.03M815.97M1.06B835.69M418.51M
Net Income Common Stockholders
372.52M414.56M514.31M692.65M535.64M246.78M
Balance SheetCash, Cash Equivalents and Short-Term Investments
1.02B1.20B1.15B595.41M323.16M460.81M
Total Assets
4.08B4.15B4.02B3.67B3.25B2.40B
Total Debt
409.85M356.92M384.30M278.10M337.28M311.71M
Net Debt
-570.66M-814.91M-734.03M-281.30M50.62M-124.80M
Total Liabilities
943.16M900.95M967.58M1.07B1.23B921.74M
Stockholders Equity
3.09B3.22B3.00B2.60B2.02B1.48B
Cash FlowFree Cash Flow
300.17M410.30M779.51M657.44M361.31M247.29M
Operating Cash Flow
550.56M642.57M959.89M831.57M512.48M336.48M
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-45.01M85.22M

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
HMHMY
78
Outperform
$9.53B16.4425.19%0.93%20.35%20.44%
74
Outperform
$5.86B16.0711.33%1.38%-6.06%-24.97%
EMEMN
67
Neutral
$9.29B10.2516.16%4.06%2.78%1.50%
BCBCC
65
Neutral
$3.29B10.9314.26%0.95%-4.67%-35.04%
TXTX
58
Neutral
$5.56B73.52-2.75%9.53%-10.20%-152.18%
XX
58
Neutral
$12.17B182.480.86%0.37%-14.79%-88.78%
51
Neutral
$2.02B-1.12-21.36%3.65%2.87%-30.54%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
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%
TX
Ternium SA
28.52
-8.84
-23.66%
X
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.