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Weyerhaeuser (WY) to Report Q3 Earnings: What's in Store?
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Weyerhaeuser Company (WY - Free Report) is all set to report third-quarter 2018 results on Oct 26, before the opening bell. The wood-based building products manufacturer delivered better-than-expected results in three of the last four quarters, with the average positive earnings surprise being 3.7%. Notably, in the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 7.3% and 3.5%, respectively.
Shares of Weyerhaeuser have outperformed its industry so far this year. Its shares have declined 19.6% compared with the industry’s fall of 22.3%. However, earnings estimates for the to-be-reported quarter as well as current year have moved south over the past 30 days, depicting concerns surrounding the company’s earnings performance.
Let’s See How Things are Shaping Up for This Announcement
The company is expected to reap the benefits from strengthening housing-market conditions in the United States. Weyerhaeuser predicts housing starts (single-family) to grow 10% to approximately 1.3 million in 2018. Also, we believe that higher demand for repair and remodeling activities, as well as growing domestic and world economy will be beneficial for the company.
Weyerhaeuser’s Wood Products segment is strong, accounting for 73.8% of total net sales. In the last reported quarter, the segment generated revenues of $1,525 million, up 17.9% year over year. In fact, the segment recorded the highest EBITDA, reflecting an improvement of more than 40%, beating its own record since 2006, when its operations were approximately three times larger than they are today. The trend is expected to continue in the third quarter as well.
Moreover, the company is likely to achieve its operational excellence target of $40-$60 million in 2018. It is highly focused on reducing controllable costs by improving new reliability, enhancing product margins and maximizing the benefit of focused capital investment.
Meanwhile, Weyerhaeuser remains focused on operational excellence that includes merchandising for value, harvest and transportation efficiencies, along with flexing harvest to capture seasonal and short-term opportunities. These initiatives yielded benefits of $327 million from the Wood Products segment between 2014 and 2017. From its Timberlands segment, the company reaped benefits of $172 million between 2014 and 2017. Also, it remains on track to achieve an additional $40-$50 million in 2018.
However, the company faces higher road and forestry costs, along with a rise in fuel and unit-logging expenses. Its costs of sales grew 6% year over year in the first quarter and 8.3% in the second quarter, while selling expenses increased 4.5% in both the quarters. The company anticipates seasonally lower third-quarter earnings and adjusted EBITDA for its Wood Products and Timberland segment than the second quarter.
Meanwhile, Weyerhaeuser is exposed to risks from the unfavorable movement of foreign currencies. Also, any economic unrest in the countries served by Weyerhaeuser, especially China and Japan, will adversely impacts the company's export business.
Earnings & Revenue Expectation
The Zacks Consensus Estimate calls for Weyerhaeuser’s third-quarter revenues to increase 4.7% to $1.96 billion. Meanwhile, the consensus estimate for earnings is pegged at 39 cents, implying growth of 14.7% on a year-over-year basis.
Our proven model does not conclusively show that Weyerhaeuser is likely to beat estimates in the to-be-reported quarter. This 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 this to happen.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -6.9%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Weyerhaeuser currently carries a Zacks Rank #3.
Meanwhile, we caution against stocks with a Zacks Rank #4 and 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some companies in the Zacks Construction sector, which, according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +0.65% and carries a Zacks Rank #3. The company is expected to report quarterly results on Oct 30.
M.D.C. Holdings, Inc. has an Earnings ESP of +4.28% and a Zacks Rank #3. The company is scheduled to report quarterly results on Nov 1.
Dycom Industries, Inc. (DY - Free Report) has an Earnings ESP of +3.53% and holds a Zacks Rank #3. The company is expected to report quarterly numbers on Nov 19.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Weyerhaeuser (WY) to Report Q3 Earnings: What's in Store?
Weyerhaeuser Company (WY - Free Report) is all set to report third-quarter 2018 results on Oct 26, before the opening bell. The wood-based building products manufacturer delivered better-than-expected results in three of the last four quarters, with the average positive earnings surprise being 3.7%. Notably, in the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 7.3% and 3.5%, respectively.
Shares of Weyerhaeuser have outperformed its industry so far this year. Its shares have declined 19.6% compared with the industry’s fall of 22.3%. However, earnings estimates for the to-be-reported quarter as well as current year have moved south over the past 30 days, depicting concerns surrounding the company’s earnings performance.
Let’s See How Things are Shaping Up for This Announcement
The company is expected to reap the benefits from strengthening housing-market conditions in the United States. Weyerhaeuser predicts housing starts (single-family) to grow 10% to approximately 1.3 million in 2018. Also, we believe that higher demand for repair and remodeling activities, as well as growing domestic and world economy will be beneficial for the company.
Weyerhaeuser’s Wood Products segment is strong, accounting for 73.8% of total net sales. In the last reported quarter, the segment generated revenues of $1,525 million, up 17.9% year over year. In fact, the segment recorded the highest EBITDA, reflecting an improvement of more than 40%, beating its own record since 2006, when its operations were approximately three times larger than they are today. The trend is expected to continue in the third quarter as well.
Moreover, the company is likely to achieve its operational excellence target of $40-$60 million in 2018. It is highly focused on reducing controllable costs by improving new reliability, enhancing product margins and maximizing the benefit of focused capital investment.
Meanwhile, Weyerhaeuser remains focused on operational excellence that includes merchandising for value, harvest and transportation efficiencies, along with flexing harvest to capture seasonal and short-term opportunities. These initiatives yielded benefits of $327 million from the Wood Products segment between 2014 and 2017. From its Timberlands segment, the company reaped benefits of $172 million between 2014 and 2017. Also, it remains on track to achieve an additional $40-$50 million in 2018.
However, the company faces higher road and forestry costs, along with a rise in fuel and unit-logging expenses. Its costs of sales grew 6% year over year in the first quarter and 8.3% in the second quarter, while selling expenses increased 4.5% in both the quarters. The company anticipates seasonally lower third-quarter earnings and adjusted EBITDA for its Wood Products and Timberland segment than the second quarter.
Meanwhile, Weyerhaeuser is exposed to risks from the unfavorable movement of foreign currencies. Also, any economic unrest in the countries served by Weyerhaeuser, especially China and Japan, will adversely impacts the company's export business.
Earnings & Revenue Expectation
The Zacks Consensus Estimate calls for Weyerhaeuser’s third-quarter revenues to increase 4.7% to $1.96 billion. Meanwhile, the consensus estimate for earnings is pegged at 39 cents, implying growth of 14.7% on a year-over-year basis.
Weyerhaeuser Company Price and EPS Surprise
Weyerhaeuser Company Price and EPS Surprise | Weyerhaeuser Company Quote
What Does the Zacks Model Say?
Our proven model does not conclusively show that Weyerhaeuser is likely to beat estimates in the to-be-reported quarter. This 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 this to happen.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -6.9%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Weyerhaeuser currently carries a Zacks Rank #3.
Meanwhile, we caution against stocks with a Zacks Rank #4 and 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some companies in the Zacks Construction sector, which, according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +0.65% and carries a Zacks Rank #3. The company is expected to report quarterly results on Oct 30.
M.D.C. Holdings, Inc. has an Earnings ESP of +4.28% and a Zacks Rank #3. The company is scheduled to report quarterly results on Nov 1.
Dycom Industries, Inc. (DY - Free Report) has an Earnings ESP of +3.53% and holds a Zacks Rank #3. The company is expected to report quarterly numbers on Nov 19.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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