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Weyerhaeuser (WY) to Post Q3 Earnings: What's in the Cards?

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Weyerhaeuser Company (WY - Free Report) is scheduled to report third-quarter 2017 results on Oct 27, before the market opens.

In the last four quarters, the company delivered better-than-expected results in three while lagged in one. Average earnings surprise was a positive 5.95%. Notably, in the last quarter, the company’s earnings of 28 cents per share topped the Zacks Consensus Estimate by 3.70%.

In the last month, the company’s shares have yielded 3.4% return, outperforming the gain of 2.1% recorded by the industry.



Let us see how things are shaping up for Weyerhaeuser prior to this earnings announcement.

Factors Influencing Q3 Results

Weyerhaeuser is well poised to benefit from improving housing market conditions in the United States. For 2017, the company anticipates housing starts in the country to be roughly 1.25 million.

Per the U.S. Census Bureau’s latest report, the country’s housing starts in September grew 6.1% from the year-ago month. The improvement was primarily driven by higher housing starts in the Northeast, the Midwest and the West. Also, housing completions in the month grew 10.3%. Moreover, the company will likely reap benefits from the surge in demand for building products following the damages caused by the hurricanes that hit the nation.

In addition, Weyerhaeuser will gain from its merger with Plum Creek Timber as well as from its strategic decisions to concentrate on core timber, land and forest products business. In the third quarter, the company divested its timberlands and manufacturing operations in Uruguay to a consortium led by BTG Pactual's Timberland Investment Group. Moreover, it will likely realize benefits of $95-$125 million for the full year from its cost-savings initiatives.

Despite all these positives, we believe that Weyerhaeuser is exposed to risks arising from high debt levels, unfavorable foreign currency movements and industry competition. Also, skilled labor shortages, lack of suitable lot and difficulties in mortgage availability might limit the company’s growth momentum.

Earnings Whisper

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case for Weyerhaeuser as you will see below.

Zacks ESP: Earnings ESP of Weyerhaeuser is currently 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 31 cents.

Weyerhaeuser Company Price and EPS Surprise
 

Weyerhaeuser Company Price and EPS Surprise | Weyerhaeuser Company Quote

Zacks Rank: Weyerhaeuser’ Zacks Rank #2 when combined with 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the building products industry you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:

Louisiana-Pacific Corporation (LPX - Free Report) , with an Earnings ESP of +16.59% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Beazer Homes USA, Inc. (BZH - Free Report) , with an Earnings ESP of +1.89% and a Zacks Rank #1.

Norbord Inc. with an Earnings ESP of +0.81% and a Zacks Rank #3.

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