Weyerhaeuser (WY) Buys Timberlands in North & South Carolina
Weyerhaeuser Company’s WY stock moved up 1.11% in the after-hours trading session on May 19. The company announced that it acquired 80,800 acres of high-quality timberlands in North and South Carolina for approximately $265 million.
Initially announced in April, the deal includes highly-productive timberlands situated in strong coastal markets and strategically located to deliver immediate synergies with existing Weyerhaeuser timber and mill operations. Additionally, the buyout will harvest tons per acre within the company's Southern Timberlands business.
With the completion, Weyerhaeuser now owns or manages more than 900,000 acres of timberlands in the Carolinas and operates four mills, a distribution center and a tree nursery and hosts multiple mitigation banks and real estate development projects.
A Look at Timberlands Business
Weyerhaeuser’s business segments — Timberlands, Real Estate, Energy and Natural Resources, and Wood Products — are categorized primarily on the basis of products and services.
Timberlands’ net sales and adjusted EBITDA increased 22% and 43.6%, respectively, year over year in the first quarter. The upside was backed by a $58-million increase in Western log sales attributable to a 23% increase in sales realizations and a 4% increase in sales volumes, as well as a $23 million increase in Southern log sales attributable to a 9% increase in sales volumes and an 8% increase in sales realizations.
Share Price Performance
Shares of Weyerhaeuser have strongly outperformed the Zacks Building Products - Wood industry this year. Despite rapidly changing market conditions and persistent supply-chain woes, Weyerhaeuser’s operational excellence initiatives, solid momentum in U.S. housing, and solid repair and remodel demand bode well.
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The company delivered strong performance across businesses in first-quarter 2022. Demand for WY’s products remains favorable, supported by strong new residential construction and professional repair and remodel activity. Additionally, WY increased its base dividend by 5.9% and refinanced $900 million of debt in the quarter. It made meaningful progress toward multi-year growth targets by signing its first carbon capture and storage agreement.
Zacks Rank & Key Picks
Weyerhaeuser currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Louisiana-Pacific Corporation LPX is a leading manufacturer of sustainable, quality engineered, wood building materials, structural framing products and exterior siding for use in residential, industrial and light commercial construction. It operates through four segments: Siding, Oriented Strand Board, Engineered Wood Products and South America.
Louisiana-Pacific is a Zacks Rank #2 (Buy) stock. The company’s earnings estimates for 2022 have increased to $14.87 per share from $13.02 over the past 30 days.
Jacksonville, FL-based Rayonier Inc. RYN is a leading pure-play timberland REIT. With a solid portfolio of timberlands in some of the most productive timber-growing regions of the Southern United States, Pacific Northwest and New Zealand, RYN remains well-positioned to capitalize on the robust domestic demand trends. This will improve the export market conditions and create a favorable pricing environment. RYN is also focused on adding high-quality timberlands to its portfolio through acquisitions.
The consensus estimate for this Zacks Rank #2 player’s 2022 earnings has witnessed an upward revision of 1.6% in the past 30 days.
Boise, ID-based Boise Cascade Company BCC — which makes wood products and distributes building materials in the United States and Canada — is aided by factors like favorable commodity wood products, pricing and robust construction activity.
Boise Cascade currently carries a Zacks Rank #2. Earnings estimates for 2022 have moved north to $18.43 per share from $15.07 in the past 30 days.
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