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

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Weyerhaeuser Company (WY - Free Report) is slated to report fourth-quarter 2021 results on Jan 28, before the opening bell.

In the last reported quarter, the company’s earnings and net sales surpassed the Zacks Consensus Estimate by 7.1% and 3.4%, respectively. Quarterly adjusted earnings of 60 cents per share increased 15.4% from the year-ago figure of 52 cents. Net sales for the quarter came in at $2,345 million, which increased 11.1% year over year.

Weyerhaeuser’s earnings missed the consensus mark in three of the last four quarters and beat the same on another occasion, with the average surprise being 0.6%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased to 48 cents from 46 cents per share over the past seven days. That said, the estimated figure is in line with the year-ago level. The consensus mark for revenues is $2.13 billion, suggesting 3.2% 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

Tepid sales and higher costs are expected to have weighed on Weyerhaeuser’s year-over-year performance. The company has been witnessing soft domestic sales realizations for lumber and oriented strand board (OSB). The OSB market weakened significantly at the outset of the third quarter, with softening of do-it-yourself repair and remodel activity. This has been resulting in a rapid decline in pricing for OSB composite and framing lumber composite.

As announced during the third-quarter earnings call, the company expects fourth-quarter earnings and adjusted EBITDA for the Wood Products segment (contributing approximately 77% to revenues) to be higher on a sequential basis. For the fourth quarter, it expects increased sales volumes, mostly for OSB. Weyerhaeuser expects lower raw material costs for OSB web stock.

The Zacks Consensus Estimate for the Wood Products segment revenues is pegged at $662 million, implying a decrease from $1,652 million in the year-ago period and $1,853 million in the third quarter.

For the Timberland segment (contributing approximately 20% to revenues), Weyerhaeuser expects earnings and adjusted EBITDA in the Timberland segment to be comparable to the third quarter. In the West, it expects slightly higher fee-harvest volumes, and lower per unit log and haul costs as salvage-related harvest will decline. The company anticipates domestic-sales realizations to be moderately lower than the third quarter. In the South, it expects marginally higher fee-harvest volumes owing to improving weather conditions and marginally higher sales realizations.

The Zacks Consensus Estimate for the Timberland segment’s revenues is pegged at $547 million, implying an improvement from the fourth-quarter 2020 figure of $502 million and $541 million in third-quarter 2021.

For the Real Estate, Energy and Natural Resources segment (contributing about 3% to total revenues), Weyerhaeuser anticipates earnings and adjusted EBITDA to be less than the third quarter due to the timing of transactions.

The Zacks Consensus Estimate for the Real Estate, Energy and Natural Resources segment revenues is pegged at $54 million, implying year-over-year growth from $30 million but a sequential decline from $69 million.

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: The company has an Earnings ESP of +19.58%. 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 With Favorable Combination

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.

Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #1.

Shares of Boise Cascade have gained 44.5% over the past year. BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 45.5%.

Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +1.08% and a Zacks Rank #1.

Shares of Louisiana-Pacific have gained 62.9% over the past year. LPX’s earnings topped the consensus mark in all the last four quarters, with the average being 10.5%.

PulteGroup, Inc. (PHM - Free Report) has an Earnings ESP of +1.88% and a Zacks Rank #2.

Shares of PHM have gained 11.3% over the past year. PHM’s earnings topped the consensus mark thrice but missed the same on one occasion, with the average surprise being 3.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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