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Rayonier's (RYN) Q1 Earnings Surpass Estimates, Stock Up

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Rayonier Inc. (RYN - Free Report) reported first-quarter 2018 pro forma net income per share of 31 cents, comfortably beating the Zacks Consensus Estimate of 16 cents. Further, the bottom line surpassed the prior-year quarter figure of 27 cents.

Total sales for the first quarter came in at $203 million, up 4.4% year over year, outpacing the Zacks Consensus Estimate of $191 million.

Results reflect decent performance of the Pacific Northwest and New Zealand Timber segments, backed by rise in sawtimber prices, as well as 12% higher harvest volumes. In the Real Estate segment, the company increased its dispositions and also enjoyed higher average pricing.  However, performance in the Corporate segment was disappointing.

Moreover, shares of the company gained nearly 1%, and closed at $37.92 on May 3, 2018.

Rayonier Inc. Price, Consensus and EPS Surprise
 

Segmental Performance

During the reported quarter, pro forma operating income at the company’s Southern Timber segment declined to $12.2 million from $13.9 million recorded in the year-ago quarter.

The Pacific Northwest Timber posted pro forma operating income of $4.7 million against operating loss of $0.9 million incurred in first-quarter 2017.

New Zealand Timber reported pro forma operating income of $16 million, significantly up from the prior-year quarter figure of $10 million.

Real Estate’s pro forma operating income was $28.1 million, lower than the year-ago figure of $29.7 million.

Trading segment’s pro forma operating income was $0.1 million, down from the year-ago figure of $1.1 million.

Lastly, pro forma operating loss at the Corporate and Other segment was $4 million compared with a loss of $4.8 million incurred in first-quarter 2017.

Liquidity

Rayonier ended the first quarter with $92.8 million in cash and cash equivalents, down from $112.7 million recorded at the end of first-quarter 2017. Total long-term debt was $996.1 million, significantly down from the year-earlier figure of $1.02 billion.

Conclusion

We are encouraged by the company’s robust earnings and revenue performance. Notably, Rayonier has been actively repositioning its portfolio, through dispositions and strategic acquisitions. This favors the company’s U.S. South and Pacific Northwest portfolio, which is expected to perform well amid the ongoing U.S. housing recovery.

Nevertheless, the company faces competition from its substitutes and other market players in the timberland sector. Rayonier has to comply with strict regulatory requirements that are subject to frequent changes, which affect its business.  Furthermore, lower quarterly harvest volumes and higher stumpage removals are expected to remain headwinds.

Currently, Rayonier carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We are now looking forward to the earnings releases of EPR Properties (EPR - Free Report) , Jones Lang LaSalle Inc. (JLL - Free Report) and Realty Income Corp. (O - Free Report) . All of these are scheduled to report their quarterly numbers on May 8.

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