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Can Rayonier (RYN) Rebound This Earnings Season? - Analyst Blog

Real estate investment trust (REIT) Rayonier Inc. ( RYN ), is expected to report its third-quarter 2014 results on Oct 23.

Last quarter, it posted an 82.98% negative surprise. Also, the company has a trailing four month negative surprise of 20.54%.

Let's see how things are shaping up for this announcement.

Factors to Consider This Quarter

Rayonier reported disappointing results in the first half of 2014 due to rising interest expenses. Moreover, the company suffered from low export prices in its Pacific Northwest and New Zealand operations, owing to log inventory imbalance in China stemming from high worldwide supply. Also, Rayonier expects lower export prices for the rest of 2014, owing to similar concerns.

However, improving revenues from the company's timberlands in the U.S. South come as a relief. The region is benefitting from higher demand scenario and therefore revenues are expected to be well above the last-year figures. Also, Rayonier has scope for improvement, given the encouraging demographic trends that is expected to result in an uptick in housing markets and demand for real estate properties across the nation.

Earnings Whispers?

Our proven model does not conclusively show that Rayonier will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zero Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 20 cents. Hence, the difference is 0.00%.

Zacks Rank #3: Rayonier's Zacks Rank #3 (Hold) when combined with a 0.00% Earnings ESP makes surprise prediction difficult.

Notably, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

You could consider other stocks in the REIT sector that have both a positive Earnings ESP and a favorable Zacks Rank:

Mack-Cali Realty Corp. ( CLI ) has an Earnings ESP of +2.13% with a Zacks Rank #2 (Buy). The company will report its third-quarter 2014 results on Oct 23.

Highwoods Properties Inc. ( HIW ) has an Earnings ESP of +2.74% with a Zacks Rank #2. The company will report its third-quarter 2014 results on Oct 28.

Avalonbay Communities Inc. ( AVB ) has an Earnings ESP of +8.46% with a Zacks Rank #3. The company will report its third-quarter 2014 results on Oct 27.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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