On May 30, 2013, we reiterated 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 growth prospects due to the rising demand for
wood products stemming from a recovery in the residential
construction market. However, we believe that the positives have
already been factored in, while cut-throat competition remains
Plum Creek reported impressive results for first-quarter 2013.
The company's earnings per share reached 35 cents, comfortably
surpassing the Zacks Consensus Estimate of 32 cents and well
ahead of the year-ago quarter earnings of 18 cents. The company
registered a decent performance across its segments and also
recently announced an approximate 5% hike in its quarterly
We believe that Plum Creek's diversified timber and land base
enables it to benefit from large economies of scale. Its deal
with Drax and
Vulcan Materials Company
) also augurs well for its top line. It is aiming to raise its
non-real estate adjusted EBITDA by $50 million this year and
already reported growth of $12 million in the first quarter.
Thus, with solid quarterly results and strong fundamentals, the
company is well poised to maintain its growth curves and
simultaneously benefit shareholders with steadily rising
dividend. Yet, the cyclical nature of the business, cut-throat
competition and strict environment policies would limit its
long-term growth potential to some extent.
Moreover, following the release of first-quarter 2013 results,
over the last 30 days, the Zacks Consensus Estimate for 2013
moved up a cent to $1.39 per share while for 2014, it remained
stable at $1.67 per share. Plum Creek currently has a Zacks Rank
Other Stocks to Consider
The other two stocks which are performing better and deserve a
), both carrying a Zacks Rank #2 (Buy).
LOUISIANA PAC (LPX): Free Stock Analysis
PLUM CREEK TMBR (PCL): Free Stock Analysis
VULCAN MATLS CO (VMC): Free Stock Analysis
WEYERHAEUSER CO (WY): Free Stock Analysis
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