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Weyerhaeuser (WY) to Report Q2 Earnings: What to Expect?

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Weyerhaeuser Company (WY - Free Report) is scheduled to report second-quarter 2016 results on Aug 5, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at 20 cents.

In the four trailing quarters, Weyerhaeuser delivered better-than-expected results in three while recording in-line results in one. Average earnings surprise was a positive 19.91%. Last quarter, the company’s earnings of 24 cents per share exceeded the Zacks Consensus Estimate of 20 cents. Let us see how things are shaping up for the company prior to this announcement.

Factors to Affect Q2 Results

Financial performance of Weyerhaeuser Company is highly dependent on the housing market of the U.S. On a month-over-month basis, housing starts in the country increased 3.8% in Apr 2016, fell 1.7% in May and grew 4.8% in June. We believe that the recovering U.S. housing market must have benefited the company’s Timberlands and Wood Products segments in the quarter.

For second-quarter 2016, Weyerhaeuser anticipates sequentially comparable earnings from the Timberland and Real Estate, Energy and Natural Resources segments, while predicts sequentially higher earnings for the Wood Products and Cellulose Fibers segments. For the year, the company anticipates housing starts to be over 1.2 million. Also, the company’s ongoing cost-reduction initiatives will help it reduce controllable costs and improve earnings before interest, tax, depreciation and amortization contributions from various businesses.

However, Weyerhaeuser is exposed to risks arising from near-term headwinds, including stiff competition, adverse currency translation and geopolitical issues.

Earnings Whispers

Our proven model does not conclusively show that Weyerhaeuser will likely beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat. That is not the case here as you will see below.

Zacks ESP: Weyerhaeuser currently has an ESP of 0.00% for second-quarter 2016. This is because the Most Accurate Estimate and the Zacks Consensus Estimate currently stand at 20 cents.

Zacks Rank: Weyerhaeuser’s Zacks Rank #3 when combined with 0.00% ESP makes an earnings beat uncertain this quarter.

WEYERHAEUSER CO Price and EPS Surprise

WEYERHAEUSER CO Price and EPS Surprise | WEYERHAEUSER CO Quote

Note that we caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are companies in the building industry you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Potlatch Corporation (PCH - Free Report) , with an Earnings ESP of +1.43% and a Zacks Rank #1.

Boise Cascade Company (BCC - Free Report) , with an Earnings ESP of +19.15% and a Zacks Rank #2.

Masco Corporation (MAS - Free Report) , with an Earnings ESP of +2.33% and a Zacks Rank #2.

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