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Factor Setting the Tone for Weyerhaeuser's (WY) Q1 Earnings

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Weyerhaeuser Company (WY - Free Report) is slated to report first-quarter 2022 results on Apr 29, before the opening bell.

In the last reported quarter, the company’s earnings and net sales surpassed the Zacks Consensus Estimate by 2.1% and 3.6%, respectively. Quarterly adjusted earnings of 49 cents per share increased from the year-ago figure of 48 cents. Net sales for the quarter came in at $2,206 million, which also increased 6.9% year over year.

Weyerhaeuser’s earnings beat the consensus mark in two of the last four quarters but missed the same on the other two occasions, with the average surprise being 1.6%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased to $1.14 from $1.07 per share over the past 30 days. The estimated figure indicates an increase of 25.3% from the year-ago level. The consensus mark for revenues is $2.91 billion, suggesting 16.2% 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

Despite persistent operational and market challenges, operational excellence improvements, strong demand and disciplined capital allocation are expected to have aided Weyerhaeuser’s first-quarter 2022 performance.

Meanwhile, transportation and resin shortages have been a potent headwind for the Wood business. Higher raw material costs for oriented strand board (OSB) web stock, resin and veneer may have also been a pressing concern.

As announced during the fourth-quarter 2021 earnings call, the company expects first-quarter earnings and adjusted EBITDA for the Wood Products segment (contributing approximately 78% to revenues) to be in line sequentially. WY expects modestly higher sales volumes for OSB, partially offset by moderately increased fiber costs. For lumber, the company expects moderately higher log costs and slightly lower sales volumes, partially offset by improved unit manufacturing costs. Engineered wood products or EWP sales volumes are expected to be higher than comparable sales realizations.

The Zacks Consensus Estimate for the Wood Products segment revenues is pegged at $2,483 million, implying an increase from $2,021 million in the year-ago period and $1,718 million in the fourth quarter.

For the Timberland segment (contributing approximately 26% to revenues), Weyerhaeuser expects earnings and adjusted EBITDA in the Timberland segment to be higher than fourth-quarter 2021. In the West, it expects higher fee-harvest volumes, domestic sales realizations, slightly improved export-sales realization, and forestry and road costs. WY also expects per unit log and haul costs to decline moderately on a sequential basis. In the South, the company expects sales realizations to be in line with fourth-quarter 2021. It also anticipates seasonally lower forestry and road costs in the region. Meanwhile, WY expects marginally lower fee-harvest volumes and higher per unit log and haul costs.

For the Real Estate, Energy and Natural Resources segment (contributing about 3% to total revenues), Weyerhaeuser anticipates earnings and adjusted EBITDA to be higher than the fourth quarter.

The Zacks Consensus Estimate for the Real Estate, Energy and Natural Resources segment revenues is pegged at $123 million, implying growth from $106 million a year ago and from $59 million in the prior quarter.

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 +9.65%. 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 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.

Owens Corning (OC - Free Report) has an Earnings ESP of +0.37% and carries a Zacks Rank #3.

OC’s earnings topped the consensus mark in all the last four quarters, with the average being 15.5%.

Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +1.87% and holds a Zacks Rank #2.

LPX’s earnings topped the consensus mark in all the last four quarters, with the average being 13.3%.

KBR, Inc. (KBR - Free Report) has an Earnings ESP of +6.64% and a Zacks Rank #3.

In the trailing four quarters, KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 10.4%.

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