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What to Expect From Weyerhaeuser (WY) This Earnings Season?

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Weyerhaeuser Company (WY - Free Report) is scheduled to report fourth-quarter 2017 results on Feb 2, before the market opens.

The company delivered better-than-expected results in three of the last four quarters while lagged in one. Average earnings surprise was a positive 7.23%. Notably, last quarter, the company’s earnings of 34 cents per share topped the Zacks Consensus Estimate by 9.68%.

In the last three months, the company’s shares have yielded 2.8% return, underperforming the gain of 6.5% recorded by the industry.



Let us see how things are shaping up for Weyerhaeuser prior to this earnings announcement.

Factors Influencing Q4 Results

Weyerhaeuser’s businesses, especially its Timberlands and Wood Products operations, are highly dependent on the housing market in the United States.

We believe that healthy growth in the U.S. housing market in the fourth quarter must have benefited the company’s quarterly operations. On a month-over-month basis, housing starts increased in October and November but slipped 8.2% in December. Overall, housing starts in the October-December quarter were up roughly 6.7% from the previous quarter. Favorable population and robust labor market will support new construction activities while aging of existing construction will raise demand for repair and remodelling services. Moreover, higher lumber prices are likely to boost sales realization in the quarter.

However, high debt levels, industry competition and lack of suitable lot might keep the momentum at bay. Moreover, a drastic fall in demand from China and Japan will prove detrimental to the company’s export businesses.

For the fourth quarter, Weyerhaeuser anticipates sequentially higher earnings and adjusted earnings before interest, tax, depreciation and amortization for the Timberland and Real Estate, Energy & Natural Resources segments.

In addition, the company’s ongoing operational initiatives are anticipated to support its results in 2017. It aims to reap a benefit of $40-$50 million in the Timberlands segment and $55-$75 million in the Wood Products segment.

Earnings Whisper

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case for Weyerhaeuser as you will see below.

Zacks ESP: Earnings ESP of Weyerhaeuser is currently -2.41%.

Weyerhaeuser Company Price, Consensus and EPS Surprise
 

Weyerhaeuser Company Price, Consensus and EPS Surprise | Weyerhaeuser Company Quote

Zacks Rank: Weyerhaeuser’ Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.

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

Stocks to Consider

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

Boise Cascade, L.L.C. (BCC - Free Report) , with an Earnings ESP of +15.79% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Louisiana-Pacific Corporation (LPX - Free Report) , with an Earnings ESP of +6.90% and a Zacks Rank #1.

Potlatch Corporation (PCH - Free Report) with an Earnings ESP of +0.84% and a Zacks Rank #1.

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