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In the last reported quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by 75% but net sales missed the same by 0.7%. Quarterly adjusted earnings and net sales for the quarter, however, decreased 84% and 39.6%, respectively.
Weyerhaeuser’s earnings beat the consensus mark in all the last four quarters, with the average surprise being 28.7%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at 21 cents per share over the past 30 days. The estimated figure indicates a decrease of 80.2% from the year-ago level. The consensus mark for revenues is $2.03 billion, suggesting a 31.8% year-over-year decline.
Factors to Note
Slow construction activities are expected to have weighed on Weyerhaeuser’s second-quarter 2023 results on a year-over-year basis. Precisely, a slow housing market and weakness in the Wood Products segment are likely to have depressed the company’s quarterly results on a year-over-year basis.
Overall, lower lumber and OSB prices are expected to have weighed on Weyerhaeuser’s second-quarter 2023 performance despite operational excellence improvements and disciplined capital allocation moves of the company. Meanwhile, the company is expected to have registered sequentially higher sales given the improving housing market conditions.
Meanwhile, transportation and resin shortages have been a headwind for the Wood business. Higher raw material costs for OSB web stock, resin and veneer may have also been a pressing concern.
During first-quarter 2023 earnings call, WY highlighted that it expects the Wood Products segment’s earnings and adjusted EBITDA to be moderately higher sequentially for the second quarter of 2023 (excluding the effect of changes in average sales realizations for lumber and oriented strand board or OSB). WY anticipates sales volumes to be comparable, with slightly lower fiber costs and moderately higher unit manufacturing costs for OSB. Sales volumes are likely to be significantly higher, and raw material costs are projected to be moderately low for most engineered wood products, partially offset by slightly lower sales.
Our model predicts Wood Products segment revenues (which accounted for approximately 70% of first-quarter 2023 revenues) to decrease 37.6% year over year but increase 10.9% sequentially to $1,461.2 million in the quarter. Adjusted EBITDA is expected to decline 80.6% but increase 19.4% sequentially to $176.8 million from a year ago.
Weyerhaeuser expects earnings (before special items) and adjusted EBITDA in the Timberland segment to be $20 million low sequentially. In the West, it anticipates moderately lower sales realizations, partially offset by significantly low per-unit log and haul costs as well as slightly high fee harvest volumes. In the South, sales realizations and per-unit log and haul costs are likely to be slightly low, while fee harvest volumes are projected to be comparable. Forestry and road costs in the South and North are expected to be seasonally higher.
We expect the Timberland segment net sales (which accounted for 32.1% of first-quarter net sales) to drop 9.6% year over year but grow 0.4% sequentially to $606.4 million. Adjusted EBITDA is expected to decline 23.3% from a year ago and 10.7% sequentially to $167.9 million.
Meanwhile, in the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings to be sequentially comparable. Adjusted EBITDA is likely to be $20 million, which is lower than the first quarter, thanks to the timing and mix of sales.
Our model predicts the Real Estate, Energy and Natural Resources segment (which accounted for 5.4% of first-quarter net sales) net sales to be $105.6 million, down 9.7% year over year but up 4.6% sequentially. Adjusted EBITDA is expected to decline 26.3% from a year ago and 11.3% sequentially to $78.9 million.
Our proven model does not conclusively predict 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, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Currently, WY has an Earnings ESP of -0.49% and sports a Zacks Rank #1.
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 on their respective quarters to be reported.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
Owens Corning (OC - Free Report) has an Earnings ESP of +1.11% and sports a Zacks Rank #1.
OC’s earnings topped the consensus mark in all the last four quarters, the average being 15.1%. Earnings for the to-be-reported quarter are expected to decrease 15.1% year over year.
AECOM (ACM - Free Report) has an Earnings ESP of +1.05% and a Zacks Rank #2.
ACM’s earnings topped the consensus mark in all the last four quarters, the average being 4.8%. Earnings for the to-be-reported quarter are expected to increase 10.5% year over year.
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Factors Setting the Tone for Weyerhaeuser's (WY) Q2 Earnings
Weyerhaeuser Company (WY - Free Report) is slated to report second-quarter 2023 results on Jul 27, after the closing bell.
In the last reported quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by 75% but net sales missed the same by 0.7%. Quarterly adjusted earnings and net sales for the quarter, however, decreased 84% and 39.6%, respectively.
Weyerhaeuser’s earnings beat the consensus mark in all the last four quarters, with the average surprise being 28.7%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at 21 cents per share over the past 30 days. The estimated figure indicates a decrease of 80.2% from the year-ago level. The consensus mark for revenues is $2.03 billion, suggesting a 31.8% year-over-year decline.
Factors to Note
Slow construction activities are expected to have weighed on Weyerhaeuser’s second-quarter 2023 results on a year-over-year basis. Precisely, a slow housing market and weakness in the Wood Products segment are likely to have depressed the company’s quarterly results on a year-over-year basis.
Overall, lower lumber and OSB prices are expected to have weighed on Weyerhaeuser’s second-quarter 2023 performance despite operational excellence improvements and disciplined capital allocation moves of the company. Meanwhile, the company is expected to have registered sequentially higher sales given the improving housing market conditions.
Meanwhile, transportation and resin shortages have been a headwind for the Wood business. Higher raw material costs for OSB web stock, resin and veneer may have also been a pressing concern.
During first-quarter 2023 earnings call, WY highlighted that it expects the Wood Products segment’s earnings and adjusted EBITDA to be moderately higher sequentially for the second quarter of 2023 (excluding the effect of changes in average sales realizations for lumber and oriented strand board or OSB). WY anticipates sales volumes to be comparable, with slightly lower fiber costs and moderately higher unit manufacturing costs for OSB. Sales volumes are likely to be significantly higher, and raw material costs are projected to be moderately low for most engineered wood products, partially offset by slightly lower sales.
Our model predicts Wood Products segment revenues (which accounted for approximately 70% of first-quarter 2023 revenues) to decrease 37.6% year over year but increase 10.9% sequentially to $1,461.2 million in the quarter. Adjusted EBITDA is expected to decline 80.6% but increase 19.4% sequentially to $176.8 million from a year ago.
Weyerhaeuser expects earnings (before special items) and adjusted EBITDA in the Timberland segment to be $20 million low sequentially. In the West, it anticipates moderately lower sales realizations, partially offset by significantly low per-unit log and haul costs as well as slightly high fee harvest volumes. In the South, sales realizations and per-unit log and haul costs are likely to be slightly low, while fee harvest volumes are projected to be comparable. Forestry and road costs in the South and North are expected to be seasonally higher.
We expect the Timberland segment net sales (which accounted for 32.1% of first-quarter net sales) to drop 9.6% year over year but grow 0.4% sequentially to $606.4 million. Adjusted EBITDA is expected to decline 23.3% from a year ago and 10.7% sequentially to $167.9 million.
Meanwhile, in the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings to be sequentially comparable. Adjusted EBITDA is likely to be $20 million, which is lower than the first quarter, thanks to the timing and mix of sales.
Our model predicts the Real Estate, Energy and Natural Resources segment (which accounted for 5.4% of first-quarter net sales) net sales to be $105.6 million, down 9.7% year over year but up 4.6% sequentially. Adjusted EBITDA is expected to decline 26.3% from a year ago and 11.3% sequentially to $78.9 million.
Weyerhaeuser Company Price and EPS Surprise
Weyerhaeuser Company price-eps-surprise | Weyerhaeuser Company Quote
What the Zacks Model Unveils
Our proven model does not conclusively predict 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, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Currently, WY has an Earnings ESP of -0.49% and sports a Zacks Rank #1.
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 on their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +2.36% and sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
Owens Corning (OC - Free Report) has an Earnings ESP of +1.11% and sports a Zacks Rank #1.
OC’s earnings topped the consensus mark in all the last four quarters, the average being 15.1%. Earnings for the to-be-reported quarter are expected to decrease 15.1% year over year.
AECOM (ACM - Free Report) has an Earnings ESP of +1.05% and a Zacks Rank #2.
ACM’s earnings topped the consensus mark in all the last four quarters, the average being 4.8%. Earnings for the to-be-reported quarter are expected to increase 10.5% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.