On Feb 11, 2015, we issued an updated research report on
). Despite being well-positioned to leverage benefits from
the U.S. housing market recovery, certain near-term headwinds can
impede the company's growth momentum.
Weyerhaeuser, one of the leading U.S. forest product companies,
serves a diverse client base spread over the U.S., Canada, Japan,
Europe and other regions. The company's West Coast Timberlands are
well suited for domestic and export markets, while its Southern
Timberlands are ideal for the Wood Products market. Cellulose
Fibers benefits from its unique fluff and value-added products.
For 2015, Weyerhaeuser believes that gradual recovery in the U.S.
housing market as well as timber supply shortage from Canada will
boost demand for its Timberlands and Wood Products segments.
Housing starts are expected to be approximately 1.1−1.2 million.
Also, the company aims at an incremental EBITDA of $20−$30 million
in the Timberland segment, while targeting to lower controllable
costs by $20−$25 million in the Wood Products and $30−$35 million
in the Cellulose Fibers segments.
However, Weyerhaeuser's lower-than-expected results for
fourth-quarter 2014 have hurt investors' sentiments toward the
stock. Earnings of 27 cents per share came in below the Zacks
Consensus Estimate of 28 cents, while revenues of $1,788 million
lagged the estimate of $1,809 million. Timberland revenues inched
down 1.4% year over year, while Cellulose Fibers managed a marginal
increase of 0.8%.
For first-quarter 2015, Weyerhaeuser anticipates sequentially lower
earnings from its Cellulose Fibers segment due to reduced pulp
realizations and higher maintenance expenses as well as lower
liquid packaging board shipment volumes. Also, the company predicts
lower sales realizations in China as well as weak log demand from
Japan, due to softer housing demand and seasonal weather
Over the last 30 days, the Zacks Consensus Estimate on Weyerhaeuser
decreased 5.6% to $1.53 per share for 2015 and 1.1% to $1.79 for
With a market capitalization of $18.7 billion, Weyerhaeuser
currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in
the industry include CaesarStone Sdot-Yam Ltd. (
), Boise Cascade Co. (
) and Armstrong World Industries, Inc. (
). While CaesarStone Sdot-Yam sports a Zacks Rank #1 (Strong Buy),
both Boise Cascade and Armstrong World Industries carry a Zacks
Rank #2 (Buy).
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