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Weyerhaeuser Rides on Solid Organic & Inorganic Prospects

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We issued an updated research report on Weyerhaeuser CompanyWY on Jun 28. The company boasts solid organic and inorganic growth prospects, making it a nice investment choice for investors seeking exposure in the building products industry.

Year to date, Weyerhaeuser's shares have yielded a return of 10.34%, outperforming the gain of 7.55% recorded by the Zacks categorized Building Products industry.

Weyerhaeuser took some strategic decisions in 2016 to help it concentrate on its core timber, land and forest products business. In August, it completed divesting its liquid packaging board business while in November, it completed divesting its printing papers company, North Pacific Paper Company to One Rock Capital Partners. In December, it sold its Cellulose Fibers pulp mills to International Paper Company IP . It continued its efforts in 2017 as well. In June, it signed a deal to divest its Uruguay-based timberlands and manufacturing business to a consortium headed by BTG Pactual's Timberland Investment Group. The to-be-divested assets include more than 300,000 acres of timberlands in north central and northeastern Uruguay as well as the company's co-generation facility, plywood and veneer manufacturing facility, and a seedling nursery.

Also, Weyerhaeuser anticipates realizing benefits of $95−$125 million from its cost-savings measures in 2017. On a segmental basis, operating expense benefits will likely be in a $40−$50 million range for the Timberland segment, $55−$75 million for the Wood Products segment, including roughly $20−$25 million in oriented strand board, $20−$25 million in lumber, $10−$15 million in engineered wood products and $5−$10 million in distribution.

In the quarters ahead, the company anticipates benefiting from an improving housing market in the U.S. It currently projects housing starts to be roughly 1.25−1.30 million in 2017. To better serve its customers through improved products and services, it has planned capital spending of approximately $435 million for 2017. Of the total, roughly $300 million has been allocated for the Wood Products segment while the rest $135 million for the Timberlands segment.

Moreover, Weyerhaeuser has a sound track record of rewarding its shareholders through lucrative dividend payments. Notably, the company paid dividends of $233 million in the first quarter of 2017. In the long run, the company aims at achieving a dividend payout of up to 75% of funds available for distribution.

Zacks Rank & Other Stocks to Consider

Weyerhaeuser currently has a market capitalization of $24.96 billion and carries a Zacks Rank #2 (Buy). We believe that the above-mentioned positives clearly justify the company's current ranking. Also, the company's earnings estimates have increased 2% to $1.01 per share for 2017 and inched up 0.83% to $1.21 for 2018. These estimates represent year-over-year growth of 35% for 2017 and 19.51% for 2018.

A couple of stocks worth considering in the industry include Boise Cascade, L.L.C. BCC and Potlatch Corporation PCH . While Boise Cascade sports a Zacks Rank #1 (Strong, Buy), Potlatch Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Boise Cascade's financial performance has been impressive, with an average positive earnings surprise of 114.74% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward, over the last 60 days.

Potlatch Corporation pulled off an average positive earnings surprise of 42.59%. Its earnings estimates for 2017 and 2018 have been revised upward, over the last 60 days.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Weyerhaeuser Company (WY): Free Stock Analysis Report

Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report

Potlatch Corporation (PCH): Free Stock Analysis Report

International Paper Company (IP): Free Stock Analysis Report

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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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