Today we're going to take a closer look at large-cap Real Estate company Weyerhaeuser Company, whose shares are currently trading at $34.28. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Weyerhaeuser Company's Valuation Is in Line With Its Sector Averages:
Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 24.81 and an average price to book (P/B) ratio of 2.24. In contrast, Weyerhaeuser Company has a trailing 12 month P/E ratio of 20.0 and a P/B ratio of 2.49.
Weyerhaeuser Company's PEG ratio is 7.71, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $6,554 | $7,532 | $10,201 | $10,184 |
| Operating Margins | 10.1% | 20.2% | 35.4% | 30.2% |
| Net Margins | -1.16% | 10.58% | 25.56% | 18.46% |
| Net Income (MM) | -$76 | $797 | $2,607 | $1,880 |
| Net Interest Expense (MM) | -$348 | -$438 | -$308 | -$245 |
| Depreciation & Amort. (MM) | -$510 | -$472 | -$477 | -$480 |
| Earnings Per Share | -$0.1 | $1.07 | $3.47 | $1.71 |
| EPS Growth | n/a | 1170.0% | 224.3% | -50.72% |
| Diluted Shares (MM) | 746 | 748 | 751 | 732 |
| Free Cash Flow (MM) | $582 | $823 | $2,569 | $2,069 |
| Capital Expenditures (MM) | -$384 | -$706 | -$590 | -$763 |
| Net Current Assets (MM) | -$6,618 | -$5,971 | -$3,750 | -$3,845 |
| Current Ratio | 1.6 | 1.69 | 3.12 | 1.58 |
| Long Term Debt (MM) | $6,147 | $5,325 | $5,099 | $4,071 |
| Net Debt / EBITDA | 9.67 | 2.63 | 0.79 | 1.15 |
Weyerhaeuser Company has growing revenues and increasing reinvestment in the business, exceptional EPS growth, and generally positive cash flows. However, the firm has a highly leveraged balance sheet. Finally, we note that Weyerhaeuser Company has average net margins with a positive growth rate and a decent current ratio.
