Plum Creek (PCL) on Road to Recovery, Should You Invest? - Analyst Blog

Plum Creek Timber Company Inc. (PCL) has scope for improvement given the encouraging demographic trends that will result in an uptick in housing markets and demand for real estate properties across the nation, despite the unfavorable timber industry environment in the U.S. Specifically, as Plum Creek has a notable exposure in Southern sawlogs, a rebound in housing starts can be well capitalized on by the company.

Also, Plum Creek's timber lands and other assets acquired from MeadWestvaco Corporation (MWV) continues to perform well and are expected to be cash-flow accretive on a per share basis in 2014. Consequently, the company's third quarter 2014 adjusted earnings came in at 32 cents per share, 2 cents above the Zacks Consensus Estimate. Moreover, revenues moved up on a year-over-year basis.

However, adjusted earnings per share fell from the prior-year quarter's figure primarily due to higher interest expenses. Also, total revenues narrowly missed the Zacks Consensus Estimate.

Slower pace of growth of the residential construction market remains a looming concern for Plum Creek. This sluggish pace of residential construction has led to modest growth in southern lumber production, saw log demand as well as prices, and has adversely impacted harvest volumes.

Over the last 30 days, the Zacks Consensus Estimate increased 2.7% to $1.15 per share for 2014; while for 2015, it fell 16.9% to $1.23 per share.

To gain a deeper insight into Plum Creek, you can refer to our updated research report issued on Nov 24, 2014.

Stocks That Warrant a Look

Investors interested in the REIT industry may consider other stocks like Equity Residential (EQR) and Essex Property Trust Inc. (ESS). Both stocks hold a Zacks Rank #2 (Buy).

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MEADWESTVACO CP (MWV): Free Stock Analysis Report
 
PLUM CREEK TMBR (PCL): Free Stock Analysis Report
 
EQUITY RESIDENT (EQR): Free Stock Analysis Report
 
ESSEX PPTY TR (ESS): Free Stock Analysis Report
 
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