Analyzing Universal Forest Products (UFPI) and Deltic Timber Corporation (DEL)
Universal Forest Products (NASDAQ: UFPI) and Deltic Timber Corporation (NYSE:DEL) are both small-cap construction companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitabiliy.
Institutional and Insider Ownership
81.4% of Universal Forest Products shares are owned by institutional investors. Comparatively, 81.0% of Deltic Timber Corporation shares are owned by institutional investors. 3.4% of Universal Forest Products shares are owned by company insiders. Comparatively, 12.1% of Deltic Timber Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This table compares Universal Forest Products and Deltic Timber Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Universal Forest Products||3.03%||12.03%||7.81%|
|Deltic Timber Corporation||4.47%||4.02%||1.79%|
Universal Forest Products pays an annual dividend of $0.90 per share and has a dividend yield of 1.0%. Deltic Timber Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 0.5%. Universal Forest Products pays out 17.8% of its earnings in the form of a dividend. Deltic Timber Corporation pays out 48.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Universal Forest Products is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Universal Forest Products has a beta of 1.89, meaning that its share price is 89% more volatile than the S&P 500. Comparatively, Deltic Timber Corporation has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.
Valuation & Earnings
This table compares Universal Forest Products and Deltic Timber Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Universal Forest Products||$3.40 billion||0.53||$212.29 million||$5.05||17.53|
|Deltic Timber Corporation||$221.95 million||4.07||$46.71 million||$0.82||90.32|
Universal Forest Products has higher revenue and earnings than Deltic Timber Corporation. Universal Forest Products is trading at a lower price-to-earnings ratio than Deltic Timber Corporation, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for Universal Forest Products and Deltic Timber Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Universal Forest Products||0||0||1||0||3.00|
|Deltic Timber Corporation||1||5||4||0||2.30|
Universal Forest Products currently has a consensus price target of $110.00, suggesting a potential upside of 24.22%. Deltic Timber Corporation has a consensus price target of $46.10, suggesting a potential downside of 37.75%. Given Universal Forest Products’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Universal Forest Products is more favorable than Deltic Timber Corporation.
Universal Forest Products beats Deltic Timber Corporation on 11 of the 16 factors compared between the two stocks.
Universal Forest Products Company Profile
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.
Deltic Timber Corporation Company Profile
Deltic Timber Corporation is a vertically integrated natural resources company. The Company is engaged in the growing and harvesting of timber and the manufacturing and marketing of lumber and medium density fiberboard (MDF). It operates through four segments: Woodlands, which manages all aspects of the Company’s timberlands; Manufacturing, which consists of its approximately two sawmills that manufacture a range of softwood lumber products and the Del-Tin Fiber plant that produces MDF; Real Estate, which includes the Company’s four real estate developments and a related country club operation, and Corporate. It is also engaged in real estate development in central Arkansas. As of December 31, 2016, it developed and operated its own seed orchard. Its sawmills are located at Ola in central Arkansas and at Waldo in south Arkansas. It is engaged in developing the Chenal Valley, which is an upscale planned community, with approximately 4,300 acres of residential and commercial properties.
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