With strong recovery in housing demand following the Great
Plum Creek Timber Company Inc.
) enjoyed solid demand for its products. But as home price
appreciation took a back seat and demand for new housing tempered,
the company was left to face the music. Coupled with this, issues
regarding hike in interest rate anticipations have added to the
Therefore, despite Plum Creek's second-quarter earnings coming in
at 31 cents per share, a penny above the Zacks Consensus Estimate
and 3 cents higher than the prior-year quarter figure, a muted
outlook disappointed us.
The company lowered its full-year 2014 outlook to a range of $1.05
- $1.25 per share from a previous projection of $1.30 -
$1.50. This was due to lower harvest volumes, and anticipated
slower growth in log price as well as composition of real estate
deals for the rest of the year.
Plum Creek's Southern Timberland buyout will favor its long-term
growth. However, we believe that amid projections of slower growth
in residential construction activities along with a modest recovery
pace of timber markets in 2014, the shares would shy away from
making any turnaround. Furthermore, the cyclical nature of the
business, stiff competition and strict environmental policies
remain causes of concern.
Echoing similar sentiments, over the last 30 days, the Zacks
Consensus Estimate declined 19.4% to $1.12 per share for 2014;
while for 2015, it fell 9.8% to $1.47 per share. The stock
currently carries a Zacks Rank #4 (Sell).
To gain a deeper insight into Plum Creek, you can refer to our
updated research report issued on Aug 25, 2014.
Stocks That Warrant a Look
Investors interested in the REIT industry may consider other stocks
like Avalonbay Communities Inc. (
), Apartment Investment and Management Company (
) and American Campus Communities, Inc. (
). All these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
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