On Aug 22, 2013, we reaffirmed our long-term recommendation on
Plum Creek Timber Company Inc.
) at Neutral. This is based on the company's diversified timber
and land base and rising demand for wood products stemming from
resurgence in the residential construction market. However, stiff
competition and declining harvest volumes are plausible
This leading publicly-held timber real estate investment trust
(REIT) reported decent second-quarter 2013 results. The company's
earnings per share reached 28 cents, beating the Zacks Consensus
Estimate of 23 cents and coming well above the year-ago quarter
figure of 22 cents. Results were aided by impressive performance
in all the segments of Plum Creek.
The company owns the largest and most geographically
diversified private timberland in the U.S, with around 6.3
million acres of timberlandin the major timber producing regions
and wood products manufacturing facilities in the Northwest. This
enables the company to benefit from large economies of scale and
capitalize on the increasing value of timber over time to offset
several negative effects of cyclical commodity pricing.
Moreover, with the rebound in the residential construction
market, management expects rise in sawlog prices and demand,
aided by improving production trends for lumber and structural
panels. This augurs well for Plum Creek's growth, going
Thus, with decent quarterly results and strong fundamentals,
Plum Creek is well poised to remain on the growth trajectory and
simultaneously benefit shareholders with steadily rising
dividends. Yet, we expect declining total harvest volume,
cyclical nature of the business, cut-throat competition and
stringent environmental regulations to limit the company's
long-term growth to some extent.
Consequently, over the last 30 days, the Zacks Consensus
Estimate for 2013 moved up a penny to $1.36 per share. For 2014,
the Zacks Consensus Estimate moved north by 2 cents to $1.66 per
share. Hence, Plum Creek currently has a Zacks Rank #3
Other Stocks to Consider
REITs that are performing well include
Glimcher Realty Trust
Ramco-Gershenson Properties Trust
American Assets, Inc.
). All these stocks carry a Zacks Rank #2
AMER ASSETS TR (AAT): Free Stock Analysis
GLIMCHER REALTY (GRT): Free Stock Analysis
PLUM CREEK TMBR (PCL): Free Stock Analysis
RAMCO-GERSHENSN (RPT): Free Stock Analysis
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