Will Improvement in Housing Lead to Great Things From Weyerhaeuser?
Oct 25th 2012 8:41AM
Updated Oct 25th 2012 8:44AM
Earnings season is here once again. We're about a week in, but we have already seen some impressive numbers from banks large and small. While these results are important to those of us interested in the financial sector, others may look elsewhere when looking for opportunities beyond banks.
With that in mind, I begin to shift my attention to some of the other financial companies that will be reporting earnings over the next few weeks. Of interest today is Weyerhaeuser (NYS: WY) , the former timber company that has since converted itself into a REIT. It reports earnings Friday morning, so here are a few things I will be looking for.
What analysts are expecting
Analysts are expecting an increase in revenue and earnings from the same quarter last year, with $1.79 billion in revenue and $0.18 in earnings per share. Unlike mortgage REITs like Annaly Capital (NYS: NLY) , which use capital to purchase mortgages and other loans, Weyerhaeuser is in the business of selling lumber products to various consumers. Because of this, it is dependent on demand in some of the most cyclical industries out there, including housing.
Not only dependent on housing
Though a lot of future performance for the company is at the mercy of the housing market, it has other customers as well. It has a lucrative pulp partnership with Procter & Gamble (NYS: PG) , selling cellulose fibers to be used in various hygiene products. And while books, magazines and newspapers are increasingly going digital, Weyerhaeuser is one of the leading producers of paper for newsprint and publishing companies. Performance in the company's non-housing sectors is something worth noting.
What else to look for
With a recently boosted dividend, things are looking up for Weyerhaeuser. Throw in an improving housing market, and it might make sense to take a deeper look at one of the leading timber producers in the country. The company has plenty of room to grow into what some consider its currently lofty valuation and is required to pay out at least 90% of its earnings as dividends. There are worse companies to choose from to be sure.
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The article Will Improvement in Housing Lead to Great Things From Weyerhaeuser? originally appeared on Fool.com.Robert Eberhard has no positions in the stocks mentioned above. Follow him on Twitter for upcoming earnings news. The Motley Fool owns shares of Annaly Capital Management and Weyerhaeuser. Motley Fool newsletter services recommend The Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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