Universal Forest Products (UFPI) versus Louisiana-Pacific Corporation (LPX) Critical Survey

Universal Forest Products (NASDAQ: UFPI) and Louisiana-Pacific Corporation (NYSE:LPX) are both mid-cap construction companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Dividends

Universal Forest Products pays an annual dividend of $0.90 per share and has a dividend yield of 0.8%. Louisiana-Pacific Corporation does not pay a dividend. Universal Forest Products pays out 16.9% of its earnings in the form of a dividend.

Risk & Volatility

Universal Forest Products has a beta of 1.84, meaning that its share price is 84% more volatile than the S&P 500. Comparatively, Louisiana-Pacific Corporation has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500.

Profitability

This table compares Universal Forest Products and Louisiana-Pacific Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal Forest Products 2.85% 12.05% 7.61%
Louisiana-Pacific Corporation 11.72% 20.27% 12.44%

Earnings & Valuation

This table compares Universal Forest Products and Louisiana-Pacific Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Universal Forest Products $3.24 billion 0.69 $101.17 million $5.33 20.68
Louisiana-Pacific Corporation $2.23 billion 1.72 $149.80 million $2.07 12.80

Louisiana-Pacific Corporation has higher revenue, but lower earnings than Universal Forest Products. Louisiana-Pacific Corporation is trading at a lower price-to-earnings ratio than Universal Forest Products, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

78.7% of Universal Forest Products shares are owned by institutional investors. Comparatively, 91.4% of Louisiana-Pacific Corporation shares are owned by institutional investors. 3.4% of Universal Forest Products shares are owned by company insiders. Comparatively, 1.5% of Louisiana-Pacific Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Universal Forest Products and Louisiana-Pacific Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Forest Products 0 1 1 0 2.50
Louisiana-Pacific Corporation 2 5 2 0 2.00

Universal Forest Products currently has a consensus target price of $110.00, indicating a potential downside of 0.18%. Louisiana-Pacific Corporation has a consensus target price of $29.00, indicating a potential upside of 9.43%. Given Louisiana-Pacific Corporation’s higher possible upside, analysts plainly believe Louisiana-Pacific Corporation is more favorable than Universal Forest Products.

Summary

Louisiana-Pacific Corporation beats Universal Forest Products on 9 of the 16 factors compared between the two stocks.

About Universal Forest Products

Universal Forest Products, Inc. is a holding company. The Company, through its subsidiaries, supplies wood, wood composite and other products to three primary markets, such as retail, construction and industrial. Its segments include North, South, West, Alternative Materials, International, idX Holdings, Inc. (idX) and Corporate divisions. idX is a designer, manufacturer and installer of in-store environments. It designs, manufactures and markets wood and wood-alternative products for national home centers and other retailers; structural lumber and other products for the manufactured housing industry; engineered wood components for residential and commercial construction; specialty wood packaging, components and packing materials for various industries, and customized interior fixtures used in a range of retail stores, commercial and other structures. Its customers comprising retail market are national home center retailers and retail-oriented regional lumberyards, among others.

About Louisiana-Pacific Corporation

Louisiana-Pacific Corporation is a manufacturer of building products. The Company’s products are used in home construction, repair and remodeling, and outdoor structures. The Company operates in four segments, which include North America Oriented Strand Board (OSB), Siding, Engineered Wood Products (EWP) and South America. The OSB segment manufactures and distributes OSB structural panel products. The Siding segment offers two categories of products, which include SmartSide siding products and related accessories, and CanExel siding and accessories and other related products. The Engineered Wood Products (EWP) segment manufactures and distributes laminated veneer lumber, I-Joists, laminated strand lumber and other related products. The South American segment manufactures and distributes OSB and siding products in South America and certain export markets. Its engineered I-joists are used in residential and commercial flooring, and roofing systems and other structural applications.

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