The Zacks Analyst Blog Highlights: Universal Forest Products, Exxon Mobil, Helmerich & Payne, Matrix Service and Patterson-UTI Energy

News provided by

Mar 07, 2014, 09:30 ET

CHICAGO, March 7, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Universal Forest Products Inc. (Nasdaq:UFPI-Free Report), Exxon Mobil Corp. (NYSE:XOM-Free Report), Helmerich & Payne, Inc. (NYSE:HP-Free Report), Matrix Service Co. (Nasdaq:MTRX-Free Report) and Patterson-UTI Energy Inc. (Nasdaq:PTEN-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

Universal Forest Attractive to Own

Zacks Investment Research provided a Zacks Rank #2 (Buy) to Universal Forest Products Inc. (Nasdaq:UFPI-Free Report) on Mar 6, 2014. Going by the Zacks model, the company has higher chances of performing better than the broader market and is an attractive investment option for investors seeking exposure in the building materials industry.

Why Zacks Rank #2?

Year to date, Universal Forest Products Inc. has provided a solid return of 39.7% while its earnings are expected to grow 10.0% in the next 5 years, much higher than 6.9% expected for the industry. The company reported its fourth-quarter 2013 results on Feb 12 and ever since its shares have risen 14.8%.

A brief discussion on Universal Forest Products' fourth-quarter 2013 results is provided below:

Universal Forest Products Inc. reported earnings per share of 40 cents, a remarkable improvement over the loss of 10 cents recorded in the year-ago quarter and above the Zacks Consensus Estimate of 18 cents. Results were driven by improvement in the housing and construction markets, benefits from new product introductions and strong industrial activities.

Net sales in the quarter were $525.7 million, up 11.7% year over year due primarily to healthy performances at Universal Forest Products' 5 market segments. Unit sales increased 5% while selling prices were up by 7%. Gross margin improved by 280 basis points year over year to 12.2%.

Subsequent to the earnings release, Universal Forest Products Inc. announced two distribution agreements. The first agreement requires the company's subsidiary, Boise Cascade Building Materials Distribution, to distribute Latitudes Decking & Railing products and accessories as well as Deckorators CXT Railing Systems. The second agreement is for the distribution of CAMO Hidden Deck Fastening System.

Strong fourth-quarter 2013 results and the above-mentioned distribution agreements along with a positive average earnings surprise of 661.7% make us optimistic of better results in the quarters ahead. In the last 30 days, the Zacks Consensus Estimate has increased by 5.8% to $3.30 for 2014 and 5.6% to $4.18 for 2015. These estimates reflect year-over-year growth of 55.7% for 2014 and 26.5% for 2015.

Exxon Sets Record for Start-ups

U.S. energy behemoth, Exxon Mobil Corp. (NYSE:XOM-Free Report) announced that it expects to start production at 10 major projects, a company record in 2014. This would add new capacity of about 300,000 net oil equivalent barrels per day paving way for growth.

However, the encouraging startup plan is the result of higher levels of spending till 2013. 2014 is slated to witness a slide in spending levels. Market sentiment also was bearish and following the announcement, shares fell 1.5% to close at $93.80 on Mar 5.

In 2014, the company's capital spending is estimated to decline to $39.8 billion from a peak of $42.5 billion in 2013. Going forward, the trend is expected to continue with estimates which exclude potential acquisitions. Capital expenditures are expected to average less than $37 billion per year from 2015 to 2017.

At year-end 2013, ExxonMobil's proved reserves totaled 25.2 billion oil-equivalent barrels, comprising 53% liquids (up from 51% in 2012) and 47% natural gas (down from 49%).

Liquids addition during 2013 totaled 1.2 billion barrels, or 153% of production, and natural gas addition totaled 400 million oil-equivalent barrels for a 52% replacement ratio. Excluding the impact of asset sales, reserves addition replaced 106% of production.

Reserve addition at Upper Zakum in Abu Dhabi totaled more than 700 million barrels of crude oil. Reserve addition from the liquids-rich Woodford, Bakken and Permian plays in the United States and the Montney and Duvernay plays in Canada aggregated over 300 million oil equivalent barrels. Other additions to proved reserves were made in Canada, Kazakhstan, the Gulf of Mexico, Nigeria and the Netherlands.

Looking forward, Exxon Mobil anticipates additional project startups over the next few years in several countries, including Australia, Indonesia, Canada, Nigeria and the United States. All of these projects are expected to add about 1 million net oil equivalent barrels per day by 2017. In North America, ExxonMobil's near-term production outlook is made up of significant high-margin, low-risk liquids growth.

The company stated that it is pursuing more than 120 projects to develop about 24 billion oil equivalent barrels of oil and natural gas. Liquids production is expected to grow 2% in 2014 and 4% annually from 2015 to 2017, representing the majority of ExxonMobil's total production increase.

Liquids and liquids linked natural gas are projected to account for 69% of the company's total production by 2017, improving the profitability mix of the portfolio. The company is pursuing investment opportunities to expand its Chemical business and serve major growth markets. These projects integrate Upstream and Downstream operations and employ proprietary technologies to increase high-value product sales.

ExxonMobil is the world's best run integrated oil company given its track record of superior return on capital employed. As the largest publicly traded oil company, ExxonMobil has long been a core holding for investors seeking a defensive name with continued dividend growth.

We, however, remain skeptical due to the company's sharp drop in refinery utilization rates during the fourth quarter. Owing to lower crack spreads and narrowed crude oil differentials, fortunes of refiners industry wide went southward. In the fourth quarter, ExxonMobil's refinery throughput averaged 4.5 million barrels per day (MMBPD), down 8% from the year-earlier level of 4.8 MMBPD. As a result, the segment recorded profits of $916 million against $1.8 billion in the year-ago quarter.

ExxonMobil currently carries a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Helmerich & Payne, Inc. (NYSE:HP-Free Report), Matrix Service Co. (Nasdaq:MTRX-Free Report) and Patterson-UTI Energy Inc. (Nasdaq:PTEN-Free Report). All these stocks hold a Zacks Rank #1 (Strong Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on UFPI - FREE

Get the full Report on XOM - FREE

Get the full Report on HP - FREE

Get the full Report on MTRX - FREE

Get the full Report on PTEN - FREE

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.