The Zacks Analyst Blog Highlights: Universal Forest Products, Exxon Mobil, Helmerich & Payne, Matrix Service and Patterson-UTI Energy


For Immediate Release
Chicago, IL – March 07, 2014 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Universal Forest Products Inc. (UFPI-Free Report), Exxon Mobil Corp. (XOM-Free Report), Helmerich & Payne, Inc. (HP-Free Report), Matrix Service Co. (MTRX-Free Report) and Patterson-UTI Energy Inc. (PTEN-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday’s Analyst Blog:

Universal Forest Attractive to Own
Zacks Investment Research provided a Zacks Rank #2 (Buy) to Universal Forest Products Inc. (UFPI-Free Report) on Mar 6, 2014. Going by the Zacks model, the company has higher chances of performing better than the broader market and is an attractive investment option for investors seeking exposure in the building materials industry.  
Why Zacks Rank #2?
Year to date, Universal Forest Products Inc. has provided a solid return of 39.7% while its earnings are expected to grow 10.0% in the next 5 years, much higher than 6.9% expected for the industry. The company reported its fourth-quarter 2013 results on Feb 12 and ever since its shares have risen 14.8%.
A brief discussion on Universal Forest Products' fourth-quarter 2013 results is provided below:
Universal Forest Products Inc. reported earnings per share of 40 cents, a remarkable improvement over the loss of 10 cents recorded in the year-ago quarter and above the Zacks Consensus Estimate of 18 cents. Results were driven by improvement in the housing and construction markets, benefits from new product introductions and strong industrial activities.
Net sales in the quarter were $525.7 million, up 11.7% year over year due primarily to healthy performances at Universal Forest Products’ 5 market segments. Unit sales increased 5% while selling prices were up by 7%. Gross margin improved by 280 basis points year over year to 12.2%.
Subsequent to the earnings release, Universal Forest Products Inc. announced two distribution agreements. The first agreement requires the company’s subsidiary, Boise Cascade Building Materials Distribution, to distribute Latitudes Decking & Railing products and accessories as well as Deckorators CXT Railing Systems. The second agreement is for the distribution of CAMO Hidden Deck Fastening System.      
Strong fourth-quarter 2013 results and the above-mentioned distribution agreements along with a positive average earnings surprise of 661.7% make us optimistic of better results in the quarters ahead. In the last 30 days, the Zacks Consensus Estimate has increased by 5.8% to $3.30 for 2014 and 5.6% to $4.18 for 2015. These estimates reflect year-over-year growth of 55.7% for 2014 and 26.5% for 2015.  
Exxon Sets Record for Start-ups
U.S. energy behemoth, Exxon Mobil Corp. (XOM-Free Report) announced that it expects to start production at 10 major projects, a company record in 2014. This would add new capacity of about 300,000 net oil equivalent barrels per day paving way for growth.
However, the encouraging startup plan is the result of higher levels of spending till 2013. 2014 is slated to witness a slide in spending levels. Market sentiment also was bearish and following the announcement, shares fell 1.5% to close at $93.80 on Mar 5.
In 2014, the company's capital spending is estimated to decline to $39.8 billion from a peak of $42.5 billion in 2013. Going forward, the trend is expected to continue with estimates which exclude potential acquisitions. Capital expenditures are expected to average less than $37 billion per year from 2015 to 2017.
At year-end 2013, ExxonMobil's proved reserves totaled 25.2 billion oil-equivalent barrels, comprising 53% liquids (up from 51% in 2012) and 47% natural gas (down from 49%).
Liquids addition during 2013 totaled 1.2 billion barrels, or 153% of production, and natural gas addition totaled 400 million oil-equivalent barrels for a 52% replacement ratio. Excluding the impact of asset sales, reserves addition replaced 106% of production.
Reserve addition at Upper Zakum in Abu Dhabi totaled more than 700 million barrels of crude oil. Reserve addition from the liquids-rich Woodford, Bakken and Permian plays in the United States and the Montney and Duvernay plays in Canada aggregated over 300 million oil equivalent barrels. Other additions to proved reserves were made in Canada, Kazakhstan, the Gulf of Mexico, Nigeria and the Netherlands.
Looking forward, Exxon Mobil anticipates additional project startups over the next few years in several countries, including Australia, Indonesia, Canada, Nigeria and the United States. All of these projects are expected to add about 1 million net oil equivalent barrels per day by 2017. In North America, ExxonMobil's near-term production outlook is made up of significant high-margin, low-risk liquids growth.
The company stated that it is pursuing more than 120 projects to develop about 24 billion oil equivalent barrels of oil and natural gas. Liquids production is expected to grow 2% in 2014 and 4% annually from 2015 to 2017, representing the majority of ExxonMobil's total production increase.
Liquids and liquids linked natural gas are projected to account for 69% of the company's total production by 2017, improving the profitability mix of the portfolio. The company is pursuing investment opportunities to expand its Chemical business and serve major growth markets. These projects integrate Upstream and Downstream operations and employ proprietary technologies to increase high-value product sales.
ExxonMobil is the world’s best run integrated oil company given its track record of superior return on capital employed. As the largest publicly traded oil company, ExxonMobil has long been a core holding for investors seeking a defensive name with continued dividend growth.
We, however, remain skeptical due to the company’s sharp drop in refinery utilization rates during the fourth quarter. Owing to lower crack spreads and narrowed crude oil differentials, fortunes of refiners industry wide went southward. In the fourth quarter, ExxonMobil's refinery throughput averaged 4.5 million barrels per day (:MMBPD), down 8% from the year-earlier level of 4.8 MMBPD. As a result, the segment recorded profits of $916 million against $1.8 billion in the year-ago quarter.
ExxonMobil currently carries a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Helmerich & Payne, Inc. (HP-Free Report), Matrix Service Co. (MTRX-Free Report) and Patterson-UTI Energy Inc. (PTEN-Free Report). All these stocks hold a Zacks Rank #1 (Strong Buy).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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