Story updated at 9:50 a.m. to reflect market activity.
Universal Forest Products gained 1.1% to $53.56 in morning trading.
The firm set a price target of $53 for the stock. DA Davidson analysts said recent stock activity was an overreaction to missed earnings, saying the Universal Forest Products is set to perform well for the rest of 2014.
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Separately, TheStreet Ratings team rates UNIVERSAL FOREST PRODS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNIVERSAL FOREST PRODS INC (UFPI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 38.46% and other important driving factors, this stock has surged by 56.24% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UFPI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- UNIVERSAL FOREST PRODS INC has improved earnings per share by 38.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNIVERSAL FOREST PRODS INC increased its bottom line by earning $2.16 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.16).
- UFPI's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, UFPI has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to -$54.73 million or 15.24% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.94%.
- You can view the full analysis from the report here: UFPI Ratings Report