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In the last reported quarter, the company’s earnings and net sales missed the Zacks Consensus Estimate by 4.6% and 3.5%, respectively. Quarterly adjusted earnings and net sales for the quarter decreased 34.3% and 2.9%, respectively.
Weyerhaeuser’s earnings beat the consensus mark in two of the last four quarters, met on one and missed on another, with the average surprise being 4.1%.
How Are Estimates Placed for Weyerhaeuser Stock?
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has declined to 4 cents from 7 cents over the past 30 days. The estimated figure indicates a decrease of 87.9% from the year-ago level.
The consensus mark for revenues is $1.8 billion, indicating a 10.9% year-over-year decline.
Weyerhaeuser's third-quarter 2024 performance is expected to have reflected the impact of reduced production in its Wood Products segment and weaker results from its Western Timberlands operations. Late last month, the company lowered its guidance for the quarter due to the aforementioned headwinds.
Elevated mortgage rates have softened single-family home construction, which constitutes about 30% of the end-market demand for lumber, thus reducing housing demand. The repair & remodel (R&R) market, which represents around 40% of end-market demand for lumber, also experienced reduced demand, likely affecting the company's quarterly results.
In late September 2024, the company adjusted its Timberlands guidance. Timberland earnings are projected to be around $30 million lower than the second quarter due to weaker lumber demand and operational challenges, including higher elevation harvesting and increased fire restrictions in the Western United States.
We expect the Timberland segment net sales (which accounted for 28.6% of second-quarter net sales) to drop 1.9% year over year and 7.9% sequentially to $511 million. Adjusted EBITDA is expected to decline 18.2% from a year ago and 20.4% sequentially to $117 million.
Additionally, Weyerhaeuser adjusted its forecast for the Wood Products segment. Weyerhaeuser reduced its lumber production by 10-15% quarter-over-quarter, higher than the previously expected 5-10% cut. This was partly due to the company’s involvement in broader industry-wide curtailments aimed at aligning production with the lower demand in housing markets. Oriented strand board (OSB) and Engineered Wood Products (EWP) production also decreased due to maintenance downtime and efforts to balance production with the weaker demand from single-family home construction. Higher manufacturing costs were observed due to lower production volumes across wood products. This adds to the company's challenges in maintaining profit margins.
The company’s sales realization for lumber and OSB was lower than expected, which added to the downward pressure on third-quarter EBITDA. The price sensitivity for these products was a key factor, with lower pricing resulting in a significant reduction in earnings. Wood Products earnings and EBITDA are now projected to be $40 million lower than in the second quarter, excluding the effect of changes in average sales realizations for lumber and OSB compared with the original guidance of simply lower sequentially.
Our model predicts Wood Products segment’s revenues (which accounted for approximately 73.3% of second-quarter 2024 revenues) to decline 19.1% year over year to $1,242.8 million in the quarter. Adjusted EBITDA is expected to decline 43.6% from a year ago and 17.8% sequentially to $184.9 million.
Meanwhile, in the Real Estate, Energy and Natural Resources segment, Weyerhaeuser still expects third-quarter earnings to be about $10 million lower and adjusted EBITDA to be around $30 million lower than the second quarter, primarily due to the timing and mix of real estate sales.
Our model predicts the Real Estate, Energy and Natural Resources segment’s (which accounted for 5.6% of second-quarter net sales) net sales to be $98.9 million, down 5.8% year over year and 9.3% sequentially. Adjusted EBITDA is expected to be down 23.9% from a year ago and 29.9% sequentially to $71.5 million.
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 -73.68% and carries a Zacks Rank #4 (Sell).
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 beat on earnings in their respective quarters to be reported.
HWM’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.9%. Earnings for the to-be-reported quarter are expected to increase 41.3% year over year.
UFP Industries, Inc. (UFPI - Free Report) currently has an Earnings ESP of +6.24% and a Zacks Rank of 3.
UFPI’s earnings for the to-be-reported quarter are expected to decrease 13.3%. The company reported better-than-expected earnings in two of the last four quarters and missed on other two occasions, the average surprise being 4.6%.
United Rentals, Inc. (URI - Free Report) currently has an Earnings ESP of +0.51% and a Zacks Rank of 3.
URI’s earnings for the to-be-reported quarter are expected to increase 6.5%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 4.7%.
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Weyerhaeuser to Report Q3 Earnings: What's in Store for the Stock?
Weyerhaeuser Company (WY - Free Report) is slated to report third-quarter 2024 results on Oct. 24, after the closing bell.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In the last reported quarter, the company’s earnings and net sales missed the Zacks Consensus Estimate by 4.6% and 3.5%, respectively. Quarterly adjusted earnings and net sales for the quarter decreased 34.3% and 2.9%, respectively.
Weyerhaeuser’s earnings beat the consensus mark in two of the last four quarters, met on one and missed on another, with the average surprise being 4.1%.
How Are Estimates Placed for Weyerhaeuser Stock?
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has declined to 4 cents from 7 cents over the past 30 days. The estimated figure indicates a decrease of 87.9% from the year-ago level.
The consensus mark for revenues is $1.8 billion, indicating a 10.9% year-over-year decline.
Weyerhaeuser Company Price and EPS Surprise
Weyerhaeuser Company price-eps-surprise | Weyerhaeuser Company Quote
Factors Influencing WY’s Q3 Results
Weyerhaeuser's third-quarter 2024 performance is expected to have reflected the impact of reduced production in its Wood Products segment and weaker results from its Western Timberlands operations. Late last month, the company lowered its guidance for the quarter due to the aforementioned headwinds.
Elevated mortgage rates have softened single-family home construction, which constitutes about 30% of the end-market demand for lumber, thus reducing housing demand. The repair & remodel (R&R) market, which represents around 40% of end-market demand for lumber, also experienced reduced demand, likely affecting the company's quarterly results.
In late September 2024, the company adjusted its Timberlands guidance. Timberland earnings are projected to be around $30 million lower than the second quarter due to weaker lumber demand and operational challenges, including higher elevation harvesting and increased fire restrictions in the Western United States.
We expect the Timberland segment net sales (which accounted for 28.6% of second-quarter net sales) to drop 1.9% year over year and 7.9% sequentially to $511 million. Adjusted EBITDA is expected to decline 18.2% from a year ago and 20.4% sequentially to $117 million.
Additionally, Weyerhaeuser adjusted its forecast for the Wood Products segment. Weyerhaeuser reduced its lumber production by 10-15% quarter-over-quarter, higher than the previously expected 5-10% cut. This was partly due to the company’s involvement in broader industry-wide curtailments aimed at aligning production with the lower demand in housing markets. Oriented strand board (OSB) and Engineered Wood Products (EWP) production also decreased due to maintenance downtime and efforts to balance production with the weaker demand from single-family home construction. Higher manufacturing costs were observed due to lower production volumes across wood products. This adds to the company's challenges in maintaining profit margins.
The company’s sales realization for lumber and OSB was lower than expected, which added to the downward pressure on third-quarter EBITDA. The price sensitivity for these products was a key factor, with lower pricing resulting in a significant reduction in earnings. Wood Products earnings and EBITDA are now projected to be $40 million lower than in the second quarter, excluding the effect of changes in average sales realizations for lumber and OSB compared with the original guidance of simply lower sequentially.
Our model predicts Wood Products segment’s revenues (which accounted for approximately 73.3% of second-quarter 2024 revenues) to decline 19.1% year over year to $1,242.8 million in the quarter. Adjusted EBITDA is expected to decline 43.6% from a year ago and 17.8% sequentially to $184.9 million.
Meanwhile, in the Real Estate, Energy and Natural Resources segment, Weyerhaeuser still expects third-quarter earnings to be about $10 million lower and adjusted EBITDA to be around $30 million lower than the second quarter, primarily due to the timing and mix of real estate sales.
Our model predicts the Real Estate, Energy and Natural Resources segment’s (which accounted for 5.6% of second-quarter net sales) net sales to be $98.9 million, down 5.8% year over year and 9.3% sequentially. Adjusted EBITDA is expected to be down 23.9% from a year ago and 29.9% sequentially to $71.5 million.
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 -73.68% and carries a Zacks Rank #4 (Sell).
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 beat on earnings in their respective quarters to be reported.
Howmet Aerospace Inc. (HWM - Free Report) currently has an Earnings ESP of +1.48% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
HWM’s earnings topped the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.9%. Earnings for the to-be-reported quarter are expected to increase 41.3% year over year.
UFP Industries, Inc. (UFPI - Free Report) currently has an Earnings ESP of +6.24% and a Zacks Rank of 3.
UFPI’s earnings for the to-be-reported quarter are expected to decrease 13.3%. The company reported better-than-expected earnings in two of the last four quarters and missed on other two occasions, the average surprise being 4.6%.
United Rentals, Inc. (URI - Free Report) currently has an Earnings ESP of +0.51% and a Zacks Rank of 3.
URI’s earnings for the to-be-reported quarter are expected to increase 6.5%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 4.7%.