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UFP Industries Intrinsic Value: DCF (FCF Based)

: $129.43 (As of Today)
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As of today (2022-08-19), UFP Industries's intrinsic value calculated from the Discounted Cash Flow model is $129.43.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

UFP Industries's Predictability Rank is 5-Stars.

Margin of Safety (FCF Based) using Discounted Cash Flow model for UFP Industries is 30.49%.

The industry rank for UFP Industries's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

UFPI's Price-to-DCF (FCF Based) is ranked worse than
52.38% of 21 companies
in the Forest Products industry
Industry Median: 0.70 vs UFPI: 0.70

UFP Industries Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for UFP Industries's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

UFP Industries Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Intrinsic Value: DCF (FCF Based)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - 4.62 64.75 66.85 87.85

UFP Industries Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Intrinsic Value: DCF (FCF Based) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -11.73 73.47 87.85 71.29 129.43

UFP Industries Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 9%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average free cash flow growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Free Cash Flow Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $9.551.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

UFP Industries's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.09) = 0.96330275229358
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.09) = 0.95412844036697

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Free Cash Flow per Share*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=9.551*13.5514
=129.43

Margin of Safety (FCF Based)=(Intrinsic Value: DCF (FCF Based)-Current Price)/Intrinsic Value: DCF (FCF Based)
=(129.43-89.97)/129.43
=30.49 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


UFP Industries  (NAS:UFPI) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.


Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.


UFP Industries Intrinsic Value: DCF (FCF Based) Related Terms

Thank you for viewing the detailed overview of UFP Industries's Intrinsic Value: DCF (FCF Based) provided by GuruFocus.com. Please click on the following links to see related term pages.


UFP Industries Business Description

UFP Industries logo
Traded in Other Exchanges
Address
2801 East Beltline Avenue NE, Grand Rapids, MI, USA, 49525
UFP Industries Inc produces and sells lumber and treated wood products in three main customer categories: retail, industrial, and construction. The retail category, which generates the most revenue, sells lumber products to retailers, including big-box home improvement retailers. The industrial category sells wood pallets, boxes, packaging crates, and other containers used for industrial shipping. The construction category sells manufactured housing and building materials to the construction industry. The vast majority revenue is generated in the United States.
Executives
Mclean Benjamin J. director 2801 E BELTLINE AVE NE GRAND RAPIDS MI 49525
Worthington Scott A officer: President, UFP Industrial, LLC 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
Budden Joan A director 4200 E BELTLINE GRAND RAPIDS MI 49525
Uhlig-eastin Chad C. officer: Exec Vice Pres Purchasing 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
Schultz Terrence L. officer: President of idX Corporation 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
Wooldridge Michael G. director 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
Walker Brian C director
West Jonathan E. officer: XVP UFP Eastern Div - South 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
Benton Patrick M. officer: XVP UFP Eastern Div - North 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
Tuuk Mary E director 38 FOUNTAIN SQUARE PLAZA MD 10 AT 76 CINCINNATI OH 45263
Tutas David A. officer: Vice President Legal & Secty 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
Rhodes Thomas Wayne director 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525
James Donald L officer: XVP National Sales 2801 EAST BELTLINE, N.E. GRAND RAPIDS MI 49525
Engler John M director 2801 EAST BELTLINE, N.E. GRAND RAPIDS MI 49525
Mordell Michael F officer: Exec VP Purchasing 2801 EAST BELTLINE NE GRAND RAPIDS MI 49525

UFP Industries Headlines

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