Bull of the Day: Weyerhaeuser (WY)
With strong revenue growth potential and excellent cost management, Weyerhaeuser seems to be a position to deliver another positive surprise when it reports its earnings later this month.
Structured as a REIT, Weyerhaeuser (WY) is one of the world's largest private owners of timberlands, with about 7 million acres of timberlands primarily in the U.S., and another 14 million acres under management in Canada.
Weyerhaeuser is also one of the largest manufacturers of wood and cellulose fibers products. Earlier they also developed real estate, primarily as a builder of single-family homes but they completed the split-off of their real estate operations in June this year. With the divesture they plan to focus on their core wood products business.
Strong Second Quarter Earnings
On August 1, Weyerhaeuser reported its second-quarter results. Adjusted earnings for the quarter were $0.40 per share, up 21.2% year over year and above the Zacks Consensus
Estimate of $0.34 per share.
Net sales came in at $1,964 million, up 4.8% year over year, with 19.2% growth from the
Timberland segment , which accounted for 20.2% of net sales. The Wood Products segment s revenues, accounting for 54.8% of net sales, were $1,077 million, up from $1,065 million in the year-ago quarter and revenues from the Cellulose Fibers segment increased 2.9% year over year to $490 million and accounted for 24.9% of net sales.
Weyerhaeuser s real estate business was divested to Tri Ponte Homes, Inc. (TPH) and was classified as discontinued operations.
Returning Cash to Shareholders
Weyerhaeuser recently announced an increase in its quarterly dividend to $0.29 per share, up 32% from earlier quarterly dividend of $0.22 per share and up 93% since 2011. With the increase, the company now has an attractive dividend yield of 3.63%.
They also announced a $700 million share buyback program.
Positive Earnings Estimates Revisions
As a result of improving outlook for the company, analysts have revised their estimates upwards. Zacks consensus estimates for the current and the next year now stand at $1.35 per share and $1.64 per share respectively.
Weyerhaeuser has missed only once in the last three years. The average positive quarterly surprise delivered by the company in the last four quarters was 4.94%.
The company is ecpected to report its earnings on October 31, 2014.
Positive Industry Outlook
With a Zacks Industry Rank of 109 out of 265 (top 41%), building Products/Wood industry is expected to do well in the near-to-mid term.
The Bottom Line
With a dividend yield of 3.6%, excellent fundaments, and a solid growth potential, I believe that this stock will be a nice addition to any portfolio.
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WEYERHAEUSER CO (WY): Free Stock Analysis Report
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