Weyerhaeuser Co.WY reported weaker-than-expected fourth-quarter 2016 results.
Over the last one month, shares of this Zacks Rank #3 (Hold) stock recorded a return of 2.61% - outperforming 0.37% return provided by the Zacks classified Building-Products- Wood industry.
Earnings and Revenues
Quarterly earnings, before special items came in at 14 cents, a penny lower than the Zacks Consensus Estimate. The bottom line also fell short of the year-ago tally of 16 cents.
For full-year 2016, earnings, before special items, was 75 cents compared to 74 cents per share recorded in the year-ago tally.
Quarterly net sales were $1,596 million, lower than the Zacks Consensus Estimate of $1,626 million. However, the top line exceeded the year-earlier tally of $1,266 million.
For full-year 2016, net sales were $6,365 million versus $5,246 million recorded in the prior-year period.
In the fourth quarter, Weyerhaeuser's discontinued Cellulose Fibers segment (pulp mills, a liquid packaging board facility, and a printing papers joint venture) generated revenue of $231 million.
Weyerhaeuser now operates through three business segments, results of which are provided below:
Timberlands: In the quarter, the segment's revenues (excluding intersegment sales) totaled $672 million, up 30% year over year.
Real Estate, Energy and Natural Resources: The segment's revenues were $102 million, soaring a whopping 218.8% from the year-ago tally.
Wood Products: The segment generated revenues (excluding intersegment sales) of $1,039 million, up 10.2% year over year.
In the quarter, Weyerhaeuser's cost of sales was $1,265 million, up 26.8% year over year. Gross margin contracted 50 basis points (bps) to 20.7%.
Selling, general and administrative expenses was $106 million, up 5% year over year.
Research and development expenses were $5 million as against $6 million recorded in the year-earlier quarter.
Adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") came in at $400 million compared to $248 million witnessed in the prior-year quarter.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Weyerhaeuser's cash and cash equivalents were $676 million, down from $1,011 million recorded at the end of 2015. Long-term debt jumped 32.2% sequentially to $6,329 million.
In the quarter, Weyerhaeuser used net cash of $151 million from its operating activities, as against $339 million cash generated in the prior-year quarter. Capital spending climbed 14.4% to $191 million.
During the quarter, the company paid dividends worth $232 million.
In addition, the company repurchased roughly 68 million shares to accomplish its $2-billion accelerated share repurchase commitment in 2016.
Weyerhaeuser intends to become the biggest land, timber and forest products company in the industry on the back of its latest merger with Plum Creek and the $2.5-billion cash accrued from the divestiture of its Cellulose Fibers business. Notably, in 2016, the company returned $2 billion cash to its shareholders via share repurchase program.
Stocks to Consider
Some better-ranked stocks within the industry are listed below:
AECOM ACM has an average earnings surprise of 8.56% for the trailing four quarters and currently carries a Zacks Rank #2 (Buy). You can see see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
CalAtlantic Group, Inc. CAA currently holds a Zacks Rank #2 and has an average earnings surprise of 14.79% for the last four quarters.
Century Communities, Inc. CCS also holds a Zacks Rank #2 and has an average earnings surprise of 5.11% for the past four quarters.
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