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Weyerhaeuser Worth Buying on Solidifying U.S. Housing Market

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We believe that Weyerhaeuser Company (WY - Free Report) is a solid choice for investors, seeking exposure in the building-products industry. Growing global economy and strengthening housing market in the United States are currently the prime drivers for the stock. Internally, sound capital-allocation policies like dividend payments, share buybacks, investment in acquisition and others are boon for the company.

The stock, with roughly $27.5 billion market capitalization, was upgraded to a Zacks Rank #1 (Strong Buy) on May 18.

Weyerhaeuser delivered better-than-expected results in three of the last four quarters. Average earnings surprise was a positive 2.76%. Notably, its shares rallied 3.2% in the last three months, outperforming 0.6% gain recorded by the industry.



Why the Upgrade?

We are providing a snapshot of how Weyerhaeuser fared in the first quarter of 2018. Its earnings of 36 cents per share surpassed the Zacks Consensus Estimate by 9.1%. Net sales were up 10.2% year over year on the back of healthy Wood Products and Timberlands segments.

Strengthening U.S. economy — evident from healthy growth in GDP, rise in industrial production, improving housing market, increasing job additions and many more — as well as healthy growth prospects of the global economy, are growth boosters for the companies in the building products industry. Notably, Weyerhaeuser anticipates roughly 10% year-over-year growth in housing starts to 1.3 million in 2018. This, along with higher demand for repair and remodeling activities during the year, will be boon for the company’s Wood Products and Timberlands segments.

In the second quarter, the company anticipates earnings in the Wood Products segment to grow higher sequentially while that for the Timberlands segment to improve substantially on a year-over-year basis. Additionally, the company’s initiatives to drive operational excellence will be a boon. Benefits of roughly $40-$50 million are anticipated from the Timberlands segment and $40-$60 million from the Wood Products segment in 2018.

Moreover, Weyerhaeuser’s focus on rewarding shareholders handsomely through dividend payments and share buybacks as well as benefits from its inorganic growth strategies — including the acquisition of meaningful businesses and divestment of non-core operations — will keep investors interested in the stock.

In the last 30 days, the company’s earnings estimates for 2018 was revised upward by three brokerage firms while that for 2019 was revised by two. The company’s Zacks Consensus Estimate currently stands at $1.46 per share for 2018 and $1.47 for 2019, reflecting an increase of 7.4% and 6.5%, respectively, from their tallies 30 days ago.

Moreover, the company has a positive Earnings ESP of 4.05% for 2018 and 2.72% for 2019. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Weyerhaeuser Company Price, Consensus and EPS Surprise
 

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

Other Stocks to Consider

Some other top-ranked stocks in the industry include Boise Cascade Company (BCC - Free Report) , Louisiana-Pacific Corporation (LPX - Free Report) and Norbord Inc. . All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last 60 days, earnings estimates for each of these stocks improved for the current year and the next year. Also, average positive earnings surprise for the last four quarters was 32.92% for Boise Cascade, 0.75% for Louisiana-Pacific and 6.99% for Norbord.

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