Timber real estate investment trust (REIT)
Plum Creek Timber Company Inc.
) will issue its third-quarter 2013 results tomorrow, Oct 28,
after the market close.
In the last quarter, it delivered a positive earnings surprise of
about 21.74% backed by the rising demand for wood products
stemming from the residential construction market recovery. The
company registered a decent performance across its segments.
However, the question is - Will Plum Creek be able to keep the
earnings streak alive? Let's see how things are shaping up for
Our proven model conclusively shows that Plum Creek is likely to
beat the Zacks Consensus Estimate in the third quarter. That is
because a stock needs to have both a positive Earnings ESP and a
Zacks Rank #1 (Strong Buy) or at least Rank #2 or #3 for this to
happen. Plum Creek has the right combination of these two key
ingredients that are elaborated below.
Positive Zacks ESP:
for Plum Creek is +2.38 %. This is because the Most Accurate
estimate stands at 43 cents while the Zacks Consensus Estimate is
lower at 42 cents.
Plum Creek's Zacks Rank #3 (Hold) enhances the predictive power
of ESP. This combination of its Zacks Rank and Earnings ESP makes
us confident of an earnings surprise call in the to-be-reported
What is Driving the Better-than-Expected
We believe that Plum Creek's diversified timber and land base
will continue to help it draw positives from large economies of
scale. Also, the upsurge in housing markets demographic trends
and real estate assets demand across the country provides a
strong upside potential for the company. Therefore, with solid
fundamentals, Plum Creek is well poised to maintain its growth
curves and simultaneously benefit shareholders.
Growth in single family homes construction is expected to drive
the demand for wood. Moreover, decent domestic demand and an
active export market are expected to support healthy sawlog
During the quarter, Plum Creek penned a long-term fiber supply
and services deal with the bioenergy firm, The Enova Group. Also,
the company penned a deal to acquire interest in around 255
million tons of crushed stone production at 4 quarries from
Vulcan Materials Co.
), positioned at metro Atlanta, GA for $154 million.
The move comes as Plum Creek focuses on leveraging on the
construction material production in the lucrative southeastern
markets. Plum Creek will enjoy royalty payments from the
production and sale of crushed stone, mined from the quarries
over the next 25 years, starting this October. A similar deal was
also signed with Vulcan earlier this year for four SC-based
Plum Creek's operating environment during the third quarter and
its activities were adequate to win analysts' confidence. As a
result, the Zacks Consensus Estimate for the quarter moved up
2.4% to 42 cents per share over the last 30 days.
Stocks to Consider
Here are a couple of REIT stocks you may want to consider, as our
model shows that these have the right combination of elements to
post an earnings beat this quarter:
Cousins Properties Inc.
) has an earnings ESP of +20.00 % and carries a Zacks Rank #3. It
is scheduled to report third-quarter results on Oct 30, 2013
after the market close.
The earnings ESP for
) is +3.70% and it carries a Zacks Rank #2. The company is
scheduled to release third-quarter results on Oct 31, 2013.
COUSIN PROP INC (CUZ): Free Stock Analysis
PLUM CREEK TMBR (PCL): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
VULCAN MATLS CO (VMC): Free Stock Analysis
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