Shares of Plum Creek Timber Company Inc. crafted a new 52-week high, touching $54.45 during the trading session on May 20. The closing price of this real estate investment trust (REIT) represents a solid year-to-date return of 21.9%. The trading volume for the session was over 0.7 million shares.
Despite its strong price appreciation, we believe that any significant upside to the stock is unlikely in the near term, given its estimate revisions over the last 30 days.
Factors to Consider
Impressive first-quarter 2013 results – including an earnings surprise of 9.4% and increasing demand for wood products stemming from a recovery in the residential construction market have been the key growth drivers.
Its deal with Drax and Vulcan Materials Company (VMC - Analyst Report) also augurs well for its top line. Moreover, the company recently announced a 5% hike in its quarterly cash dividend rate, based on its bullish expectations of persistent growth of long-term, sustainable cash flow. Yet, the cyclical nature of the business, cut-throat competition and strict environment policies are likely to cap its long-term growth potential to some extent.
On Apr 29, Plum Creek reported impressive results for first-quarter 2013. The company’s earnings per share reached 35 cents, comfortably surpassing the Zacks Consensus Estimate of 32 cents and well ahead of the year–ago quarter earnings of 18 cents.
The better-than-expected results at this REIT were driven by increasing demand for wood products stemming from a recovery in the residential construction market. The company has registered a decent performance across its segments.
Over the last 30 days, the Zacks Consensus Estimate for 2013 decreased by 1.4% to $1.39 per share. However, for 2014, the Zacks Consensus Estimate remained unchanged at $1.67 per share.
A number of other REITs also touched 52-week highs this week. These include Prologis, Inc. (PLD - Analyst Report) and Camden Property Trust (CPT - Snapshot Report).