We issued an updated research report on Weyerhaeuser Company WY on Jan 6, 2017. The company grows and harvests trees, builds homes and manufactures forest products worldwide, primarily to be used as lumber and other wood and building products.

Post release of third-quarter 2016 results, Weyerhaeuser’s shares yielded 3.2% return, underperforming the return of 7.2% recorded by the Zacks-categorized Building Products-Wood industry.

We believe that Weyerhaeuser’s international operations have exposed the company to risks related to unfavorable foreign currency movements and geopolitical issues. Also, any economic unrest in the foreign countries served by the company will negatively affect its businesses.

At the same time, Weyerhaeuser faces threats from higher expenses and huge debt levels. In the third quarter, the company’s cost of sales increased 22.5% year over year. Its long-term debt was $6.3 billion at the end of the quarter. Also, it faces stiff competition from North American and global producers who have greater financial resources and lower production costs.

However, over the long term, we believe that Weyerhaeuser is well positioned to benefit from the recovery of the U.S. housing market and its cost-control measures. Also, the company has taken some strategic decisions to help it concentrate on its core timber, land, and forest products business.

In Aug 2016, Weyerhaeuser completed the divestment of its liquid packaging board business. while in October it communicated its intention of evaluating strategic alternatives for its timberlands and manufacturing operations in Uruguay. In November, the company completed divesting its printing papers company, North Pacific Paper Company to One Rock Capital Partners. In December it sold-off its Cellulose Fibers pulp mills to International Paper Company IP.

Zacks Rank & Stocks to Consider

Weyerhaeuser currently has a market capitalization of $23.2 billion and carries a Zacks Rank #3 (Hold). The above-mentioned tailwinds and headwinds clearly justify the company’s ranking.

WEYERHAEUSER CO Price and Consensus

WEYERHAEUSER CO Price and Consensus | WEYERHAEUSER CO Quote

A couple of better-ranked stocks in the industry include Potlatch Corporation PCH and Louisiana-Pacific Corp. LPX. These two stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Potlatch Corporation has an average earnings surprise of 58.21%, while earnings estimates for 2017 have been revised upward, over the last 60 days.

Louisiana-Pacific Corp.’s financial performance has been impressive, with an average positive earnings surprise of 98.51% for the last four quarters. Also, earnings estimates for 2017 have been revised upward, over the last 60 days.

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Weyerhaeuser Company (WY): Free Stock Analysis Report
 
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