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Factors Setting the Tone for Weyerhaeuser's (WY) Q4 Earnings

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Weyerhaeuser Company (WY - Free Report) is slated to report fourth-quarter 2020 results on Jan 29, before the opening bell.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 33.3% but revenues missed the same by 0.6%. On a year-over-year basis, earnings and revenues increased 550% and 26.3%, respectively.

Weyerhaeuser’s earnings topped the consensus mark in one of the last four quarters, with the average surprise being 251.2%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased to 47 cents from 46 cents per share over the past 30 days. The estimated figure indicates 1,466.7% growth from the year-ago earnings of 3 cents per share. The consensus mark for revenues is $1.93 billion, suggesting 24.7% 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 earnings and sales are expected to have increased in the fourth quarter. As the company’s performance is highly associated with the housing market, solid momentum in the markets served is expected to benefit the quarterly results. Solid demand for new housing across the United States might have helped Weyerhaeuser to propel the entire mix of businesses, including lumber, oriented strand board or OSB and timber.

As announced during third-quarter earnings call, the company expects fourth-quarter earnings and adjusted EBITDA for the Timberland segment (contributing nearly 25% to revenues) to increase sequentially. Geographically, in the West, Weyerhaeuser expects higher average sales realizations for domestic and Japanese export logs, as well as improved log sales volumes as Oregon harvest activity resumes and salvage operations begin. In the South, it expects slightly higher forestry expense and marginally lower average log sales realizations due to mix.

The Zacks Consensus Estimate for the Timberland segment’s revenues is pegged at $518 million, implying a 7.9% improvement from third-quarter 2020.

For the Wood Products segment (contributing 70% to company’s revenues), the company predicts earnings and adjusted EBITDA to be significantly lower on a sequential basis. It expects a modest seasonal reduction in sales volumes, higher Western and Canadian log costs, as well as lower operating rates for some of its product lines due to planned maintenance outages. That said, the Zacks Consensus Estimate for the Wood Products segment revenues is pegged at $1,431 million, implying 18.6% sequential growth.

For the Real Estate, Energy and Natural Resources segment (contributing almost 5% revenues), Weyerhaeuser anticipates sequentially lower earnings and adjusted EBITDA for the fourth quarter. This is due to the timing of real estate transactions. The Zacks Consensus Estimate for Real Estate, Energy and Natural Resources segment revenues is pegged at $34 million, implying a 47.7% 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 +5.64%. 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 #1. 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.

PulteGroup, Inc. (PHM - Free Report) has an Earnings ESP of +0.41% and holds a Zacks Rank #2.

Watsco, Inc. (WSO - Free Report) has an Earnings ESP of +9.75% and carries a Zacks Rank #2.

Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +0.25% and a Zacks Rank #3.

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