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In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 14.3% but net sales missed the same by 4%. Quarterly adjusted earnings and net sales for the quarter decreased 2.7% and 33.3%, respectively.
Weyerhaeuser’s earnings beat the consensus mark in three of the last four quarters and met on one occasion, with the average surprise being 35.4%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has declined to 15 cents from 19 cents over the past 30 days. The estimated figure indicates a decrease of 28.6% from the year-ago level. The consensus mark for revenues is $1.85 billion, suggesting a 1.7% year-over-year decline.
Weyerhaeuser's first-quarter 2024 performance is anticipated to showcase the positive impact of several factors, which include steady demand from repair and remodel activity, robust new residential construction activity (especially in the single-family sector), operational excellence enhancements, and prudent capital allocation strategies. These aspects are expected to have contributed to the quarterly performance.
However, higher fiber costs, along with higher raw material costs, have been a headwind for the business. Higher raw material costs for OSB web stock may also have been a pressing concern.
Meanwhile, in late March 2024, the company adjusted its forecast for Wood Products EBITDA for the first quarter due to unexpected challenges in lumber results. Weyerhaeuser now anticipates Wood Products EBITDA to be comparable sequentially, excluding the influence of changes in average sales realizations for lumber and OSB. This adjustment is attributed to lower lumber sales volumes and higher unit manufacturing costs than initially projected, stemming from reduced mill production caused in part by winter weather disruptions in the early part of the quarter. Previously, the company had expressed expectations for slightly higher Wood Products EBITDA compared with the fourth quarter of 2023, based on anticipated higher sales volumes and moderately lower unit manufacturing costs.
Despite the revised guidance indicating challenges, there is a notable increase in wood products pricing. This suggests that while Weyerhaeuser may face some short-term hurdles impacting profitability, the broader market dynamics, including strong demand and supply conditions, continue to support elevated prices for wood products.
Our model predicts Wood Products segment revenues (which accounted for approximately 73.4% of fourth-quarter 2023 revenues) to increase 2.9% year over year to $1,356.5 million in the quarter. Adjusted EBITDA is expected to grow 7.6% from a year ago and comparable sequentially to $159.2 million.
Weyerhaeuser anticipates that earnings (excluding special items) and adjusted EBITDA in the Timberland segment will remain consistent compared to the previous quarter. In the Western region, there is an expectation of moderately high fee harvest volumes alongside significantly reduced per-unit log and haul costs. However, sales realizations may slightly decrease due to product mix. Conversely, in the Southern region, there is a projected moderate decrease in fee harvest volumes, while sales realizations and per-unit log and haul costs are expected to remain comparable. Forestry and road costs are forecasted to decline seasonally in both the Western and Southern regions.
We expect the Timberland segment net sales (which accounted for 30.1% of fourth-quarter net sales) to drop 9.7% year over year but grow 2.1% sequentially to $545.4 million. Adjusted EBITDA is expected to decline 23.6% from a year ago and is comparable to the fourth-quarter level at $143.5 million.
Meanwhile, in the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings and adjusted EBITDA to be comparable with the fourth quarter, thanks to the timing and mix of sales. Adjusted EBITDA is likely to be $15 million higher than fourth-quarter 2023.
Our model predicts the Real Estate, Energy and Natural Resources segment (which accounted for 4.3% of fourth-quarter net sales) net sales to be $99.4 million, down 1.6% year over year but up 29.1% sequentially. Adjusted EBITDA is expected to be down 7.4% from a year ago but up 23.1% sequentially to $82.5 million.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Weyerhaeuser this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Currently, WY has an Earnings ESP of 0.00% and carries a Zacks Rank #3.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which, according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported.
KBR’s earnings topped the consensus mark in all the last four quarters, with the average surprise being 6.4%. Earnings for the to-be-reported quarter are expected to have increased 4.5% from the year-ago quarter’s reported figure.
Louisiana-Pacific Corporation (LPX - Free Report) currently has an Earnings ESP of +3.56% and a Zacks Rank of 1.
LPX’s earnings for the to-be-reported quarter are expected to have gained 232.4% from the year-ago quarter’s reported figure. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 106.2%.
United Rentals (URI - Free Report) currently has an Earnings ESP of +2.70% and a Zacks Rank of 2.
URI’s earnings for the to-be-reported quarter are expected to have increased 5% from the year-ago quarter’s reported figure. The company reported better-than-expected earnings in three of the trailing four quarters and missed on one occasion, the average surprise being 3.1%.
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Factors Setting the Tone for Weyerhaeuser's (WY) Q1 Earnings
Weyerhaeuser Company (WY - Free Report) is slated to report first-quarter 2024 results on Apr 25, after the closing bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 14.3% but net sales missed the same by 4%. Quarterly adjusted earnings and net sales for the quarter decreased 2.7% and 33.3%, respectively.
Weyerhaeuser’s earnings beat the consensus mark in three of the last four quarters and met on one occasion, with the average surprise being 35.4%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has declined to 15 cents from 19 cents over the past 30 days. The estimated figure indicates a decrease of 28.6% from the year-ago level. The consensus mark for revenues is $1.85 billion, suggesting a 1.7% year-over-year decline.
Weyerhaeuser Company Price and EPS Surprise
Weyerhaeuser Company price-eps-surprise | Weyerhaeuser Company Quote
Factors to Note
Weyerhaeuser's first-quarter 2024 performance is anticipated to showcase the positive impact of several factors, which include steady demand from repair and remodel activity, robust new residential construction activity (especially in the single-family sector), operational excellence enhancements, and prudent capital allocation strategies. These aspects are expected to have contributed to the quarterly performance.
However, higher fiber costs, along with higher raw material costs, have been a headwind for the business. Higher raw material costs for OSB web stock may also have been a pressing concern.
Meanwhile, in late March 2024, the company adjusted its forecast for Wood Products EBITDA for the first quarter due to unexpected challenges in lumber results. Weyerhaeuser now anticipates Wood Products EBITDA to be comparable sequentially, excluding the influence of changes in average sales realizations for lumber and OSB. This adjustment is attributed to lower lumber sales volumes and higher unit manufacturing costs than initially projected, stemming from reduced mill production caused in part by winter weather disruptions in the early part of the quarter. Previously, the company had expressed expectations for slightly higher Wood Products EBITDA compared with the fourth quarter of 2023, based on anticipated higher sales volumes and moderately lower unit manufacturing costs.
Despite the revised guidance indicating challenges, there is a notable increase in wood products pricing. This suggests that while Weyerhaeuser may face some short-term hurdles impacting profitability, the broader market dynamics, including strong demand and supply conditions, continue to support elevated prices for wood products.
Our model predicts Wood Products segment revenues (which accounted for approximately 73.4% of fourth-quarter 2023 revenues) to increase 2.9% year over year to $1,356.5 million in the quarter. Adjusted EBITDA is expected to grow 7.6% from a year ago and comparable sequentially to $159.2 million.
Weyerhaeuser anticipates that earnings (excluding special items) and adjusted EBITDA in the Timberland segment will remain consistent compared to the previous quarter. In the Western region, there is an expectation of moderately high fee harvest volumes alongside significantly reduced per-unit log and haul costs. However, sales realizations may slightly decrease due to product mix. Conversely, in the Southern region, there is a projected moderate decrease in fee harvest volumes, while sales realizations and per-unit log and haul costs are expected to remain comparable. Forestry and road costs are forecasted to decline seasonally in both the Western and Southern regions.
We expect the Timberland segment net sales (which accounted for 30.1% of fourth-quarter net sales) to drop 9.7% year over year but grow 2.1% sequentially to $545.4 million. Adjusted EBITDA is expected to decline 23.6% from a year ago and is comparable to the fourth-quarter level at $143.5 million.
Meanwhile, in the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings and adjusted EBITDA to be comparable with the fourth quarter, thanks to the timing and mix of sales. Adjusted EBITDA is likely to be $15 million higher than fourth-quarter 2023.
Our model predicts the Real Estate, Energy and Natural Resources segment (which accounted for 4.3% of fourth-quarter net sales) net sales to be $99.4 million, down 1.6% year over year but up 29.1% sequentially. Adjusted EBITDA is expected to be down 7.4% from a year ago but up 23.1% sequentially to $82.5 million.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Weyerhaeuser this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Currently, WY has an Earnings ESP of 0.00% and carries a Zacks Rank #3.
Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which, according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported.
KBR, Inc. (KBR - Free Report) currently has an Earnings ESP of +3.35% and has a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR’s earnings topped the consensus mark in all the last four quarters, with the average surprise being 6.4%. Earnings for the to-be-reported quarter are expected to have increased 4.5% from the year-ago quarter’s reported figure.
Louisiana-Pacific Corporation (LPX - Free Report) currently has an Earnings ESP of +3.56% and a Zacks Rank of 1.
LPX’s earnings for the to-be-reported quarter are expected to have gained 232.4% from the year-ago quarter’s reported figure. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 106.2%.
United Rentals (URI - Free Report) currently has an Earnings ESP of +2.70% and a Zacks Rank of 2.
URI’s earnings for the to-be-reported quarter are expected to have increased 5% from the year-ago quarter’s reported figure. The company reported better-than-expected earnings in three of the trailing four quarters and missed on one occasion, the average surprise being 3.1%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.