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Is Weyerhaeuser (WY) Poised to Beat Q3 Earnings Estimates?

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Weyerhaeuser Company (WY - Free Report) is slated to report third-quarter 2020 results on Oct 30, before the opening bell.

In the last reported quarter, the company’s earnings and revenues surpassed the respective the Zacks Consensus Estimate by 1000% and 23.5%. On a year-over-year basis, earnings and revenues, however, decreased 31.3% and 3.6%, respectively.

Weyerhaeuser’s earnings topped the consensus mark in two of the last four quarters and missed on the other two occasions, with the average surprise being 237.9%.

Estimate Revision Scenario

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has decreased to 39 cents from 40 cents per share over the past 30 days. This indicates 387.5% growth from the year-ago earnings of 8 cents per share. The consensus mark for revenues is $2.12 billion, suggesting 27.1% year-over-year growth.

Weyerhaeuser Company Price and EPS Surprise

Weyerhaeuser Company Price and EPS Surprise

Weyerhaeuser Company price-eps-surprise | Weyerhaeuser Company Quote

Factors to Note

Weyerhaeuser’s third-quarter earnings and sales are expected to have increased in the third quarter. As the company’s performance is highly associated with the housing market, solid rebound of the market is expected to benefit the upcoming results. Solid demand for new housing across the United States likely helped Weyerhaeuser to some extent in the entire mix of businesses, including lumber, OSB and timber.

As announced during second-quarter earnings call, the company expects third-quarter earnings and adjusted EBITDA for the Timberland segment (contributing nearly 25% to revenues) to decrease $20-$25 million from the prior quarter. Geographically, in the West, it expects third-quarter domestic log sales volumes and domestic average sales realizations to be higher than the second quarter. Demand in the West has been favorable. The company expects lower average log sales realizations and seasonally higher road, forestry, and per unit logging as well as hauling costs. In the South, it projects seasonally higher forestry expenses, decreased fee harvest volumes and slightly lower average log sales realizations, primarily due to mix.

The Zacks Consensus Estimate for the Timberland segment’s revenues is pegged at $484 million, implying a 0.8% improvement from second-quarter 2020.

For the Wood Products segment (contributing 70% to company’s revenues), the company predicts earnings and adjusted EBITDA to be significantly higher than the second quarter, primarily due to stronger average sales realizations for lumber and oriented strand board, as well as increased sales volumes across most product lines. The Zacks Consensus Estimate for the Wood Products segment revenues is pegged at $1,437 million, implying 19.1% sequential growth.

For the Real Estate, Energy and Natural Resources segment (contributing almost 5% revenues), Weyerhaeuser anticipates third-quarter earnings and adjusted EBITDA to be comparable with the second quarter. The Zacks Consensus Estimate for Real Estate, Energy and Natural Resources segment revenues is pegged at $63 million, implying a 3.1% sequential decline.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Weyerhaeuser this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Weyerhaeuser has an Earnings ESP of +6.03%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Worth a Look

Here are some other companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +1.43% and holds a Zacks Rank #1.

Installed Building Products, Inc. (IBP - Free Report) has an Earnings ESP of +4.24% and carries a Zacks Rank #1.

D.R. Horton, Inc. (DHI - Free Report) has an Earnings ESP of +2.26% and carries a Zacks Rank #3.

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