Weyerhaeuser Touches New 52-Week High - Analyst Blog

Shares of Weyerhaeuser Company WY scaled a new 52-week high of $32.40 during its trading session on Jun 24. The new apex represents a slight increase over the previous high of $32.00 reached on Oct 25, 2013.
 
Weyerhaeuser Company closed the session at $32.17, reflecting a year-to-date return of 3.4%. The trading volume for the session was 15.6 million shares. Earnings estimate revisions for 2014 and 2015 and an expected earnings growth rate of 5.0% for the next five years indicate further upward potential for this company.

Growth Drivers

Over the past five years, Weyerhaeuser has recorded an outstanding earnings growth rate of 97.4%. In the quarters ahead, the company is anticipated to benefit from a recovering U.S. housing market. Housing starts are expected to increase in 2014 and 2015. Export business is likely to flourish, Japan being the prime export destination for the company's timberland business.

Also, the slated spin-off of WRECO, its homebuilding and real estate company to TRI Pointe Homes, Inc. TPH by June end has kept the momentum high for Weyerhaeuser. The transaction, while being tax-free for the company's participating shareholders, will lower the company's shares outstanding on completion. Since May 22, the company's share price has grown by 6.0%.

For second-quarter 2014, Weyerhaeuser predicts sequentially higher earnings for the Wood Products, Cellulose Fibers and Real Estate segments, while anticipating comparable earnings for the Timberland segment. Further, the company plans to reduce its overhead costs in 2014.

Estimate Revisions Show Potency

In the last 60 days, the Zacks Consensus Estimate for Weyerhaeuser has gone up 5.5% to $1.34 for 2014 and 2.5% to $1.64 for 2015. These estimates reflect year-over-year growth rates of 17.2% for 2014 and 22.8% for 2015.

Weyerhaeuser currently has an $18.8 billion market capitalization and carries a Zacks Rank #3 (Hold). Other stocks worth considering in the building products industry include Nortek Inc. NTK and United Rentals, Inc. URI, each holding a Zacks Rank #2 (Buy).

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