As reflected at the current price of $116, what future UFP Industries operating performance is the market anticipating? To achieve average annual stock market performance of 9.0% over the next 6 years, UFP Industries shares will need to reach $195. Upper quartile performance will require a $229 UFP Industries stock price by 2029.
Executive Summary
- UFP Industries’ important characteristics: high financial strength, high expected growth, high profitability, and stability.
- High valuation, above market shareholder returns. Current valuation levels are high relative to the UFP Industries Peer Group. Recent market returns have outperformed the UFP Industries Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, UFP Industries shares should reach a level of $402 by 2029 — an 24.1% per year total shareholder return. A 2029 stock price of $195 would reflect median performance and a price of $229 would be required to reach upper quartile performance.
- UFP Industries’ achieved growth is modestly above average. Historical growth has been high relative to the UFP Industries Peer Group and forecasted growth is relatively very high. Asset Growth, and Equity Growth have been superior. These factors have buoyed market perceptions of UFP Industries. UFP Industries’ historical income statement growth has been lower than balance sheet growth. Revenue growth has fallen short of asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity. UFP Industries’ consensus growth expectations are lower than historical growth.
- Pretax ROA, and Pretax Margin are group leading. These factors have strengthened market perceptions of UFP Industries. The company has normal cash needs.
- UFP Industries’ risk profile is unfavorable. Overall variability has been very high with very high revenue variability, relatively low E.P.S. variability, and only average stock price volatility. Financial Strength is relatively very high and earnings’ expectations are relatively high. The debt/capital ratio has declined.
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