Universal Forest Products, Inc. UFPI yesterday announced that one of its subsidiaries has successfully completed the acquisition of majority assets of Marietta, GA-based North American Container Corporation. Financial consideration of the buyout, originally announced on Mar 27, has not been disclosed.
Concurrently, the company announced that it now holds the 610th position on the Fortune 1000 list for 2018.
Details of Buyout
North American Container Corporation specializes in making structural packaging products — including wood/corrugated, laminated bulk boxes, wood replacement, recyclable and reusable packaging products. Its nine production facilities in Wisconsin, South Carolina, Tennessee and Georgia enable it to meet customers’ demand effectively. Founded in 1967, North American Container’s revenues in 2017 totaled $71 million.
As noted, the addition of North American Container’s assets will strengthen Universal Forest’s product portfolio and customer base by bringing corrugated, steel and hardwood packaging solutions under one roof. Also, the buyout will enable the company to leverage benefits by penetrating into growth markets as well as enhancing its technological expertise.
North American Container will be integrated with Universal Forest’s Industrial segment. In 2017, the company generated roughly 33.3% of its gross sales (summation of segmental sales) from this segment. On a year-over-year basis, the segment’s sales grew 35% in 2017.
Snapshot of Universal Forest’s Inorganic Initiatives
We believe that the above-mentioned transaction is consistent with Universal Forest’s policy of acquiring meaningful businesses to gain access to new customers, regions and product lines.
Prior to this buyout, the company acquired Spinner Wood Products and Great Northern Lumber in January 2018. Also, it added Expert Packaging and Fontana Wood Products to its portfolio in April 2018. These buyouts are anticipated to collectively generate revenues of $50 million annually.
Universal Forest also believes in disposing of non-core assets. In January 2018, it sold its Medley, FL-based property to improve its operational efficiency and optimize the use of its resources.
Zacks Rank & Other Key Picks
With a market capitalization of nearly $2.3 billion, Universal Forest currently sports a Zacks Rank #1 (Strong Buy). The company’s Zacks Consensus Estimate is pegged at $2.57 per share for 2018 and $2.94 per share for 2019, reflecting growth of 9.4% and 7.3% from the respective 60-day-ago tallies. Also, estimates for 2018 and 2019 reflect year-over-year growth of 39.7% and 14.4%, respectively.
Universal Forest Products, Inc. Price and Consensus
Universal Forest Products, Inc. Price and Consensus | Universal Forest Products, Inc. Quote
In the last three months, shares of Universal Forest have yielded 15.5% return, outperforming 10.3% rise recorded by the industry.
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Some other top-ranked stocks worth considering in the industry are Boise Cascade Company BCC, Weyerhaeuser Company WY and Trex Company, Inc. TREX. While both Boise Cascade and Weyerhaeuser sport a Zacks Rank #1, Trex Company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last 60 days, earnings estimates for these three stocks improved for the current year and the next year. Also, average earnings surprise for the last four quarters was a positive 32.92% for Boise Cascade, 2.76% for Weyerhaeuser and 11.68% for Trex Company.
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