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Shareholders in UFP Industries, Inc. (NASDAQ:UFPI) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investor sentiment seems to be improving too, with the share price up 8.9% to US$54.91 over the past 7 days. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.
After this upgrade, UFP Industries' six analysts are now forecasting revenues of US$4.6b in 2020. This would be a credible 3.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to be US$3.24, roughly flat on the last 12 months. Prior to this update, the analysts had been forecasting revenues of US$4.1b and earnings per share (EPS) of US$2.53 in 2020. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 15% to US$57.67 per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on UFP Industries, with the most bullish analyst valuing it at US$66.00 and the most bearish at US$52.00 per share. This is a very narrow spread of estimates, implying either that UFP Industries is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that UFP Industries' revenue growth is expected to slow, with forecast 3.1% increase next year well below the historical 11% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.1% next year. Factoring in the forecast slowdown in growth, it seems obvious that UFP Industries is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at UFP Industries.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for UFP Industries going out to 2022, and you can see them free on our platform here..
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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