We've been asking ourselves recently if the market has placed a fair valuation on Weyerhaeuser Company. Let's dive into some of the fundamental values of this large-cap Real Estate company to determine if there might be an opportunity here for value-minded investors.
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 33.8 and a P/B ratio of 2.34.
Weyerhaeuser Company's PEG ratio is 5.89, 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.
Overview of the Company's Finances:
| 2018-02-16 | 2019-02-15 | 2020-02-14 | 2021-02-19 | 2022-02-18 | 2023-02-17 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $7,196 | $7,476 | $6,554 | $7,532 | $10,201 | $10,184 |
| Operating Margins | 20% | 19% | 9% | 20% | 35% | 30% |
| Net Margins | 8.0% | 10.0% | -1.0% | 11.0% | 26.0% | 18.0% |
| Net Income (MM) | $582 | $748 | -$76 | $797 | $2,607 | $1,880 |
| Net Interest Expense (MM) | -$353 | -$315 | -$348 | -$346 | -$308 | -$245 |
| Depreciation & Amort. (MM) | -$521 | -$486 | -$510 | -$472 | -$477 | -$480 |
| Earnings Per Share | $0.77 | $0.99 | -$0.1 | $1.07 | $3.47 | $2.53 |
| EPS Growth | n/a | 28.57% | -110.1% | 1170.0% | 224.3% | -27.09% |
| Diluted Shares (MM) | 757 | 757 | 746 | 748 | 751 | 743 |
| Free Cash Flow (MM) | $1,392 | $1,539 | $1,350 | $1,810 | $3,600 | $3,300 |
| Capital Expenditures (MM) | -$190 | -$427 | -$384 | -$281 | -$441 | -$468 |
| Net Current Assets (MM) | -$7,445 | -$6,601 | -$6,618 | -$6,083 | -$3,750 | -$3,845 |
| Long Term Debt (MM) | $6,232 | $5,419 | $6,147 | $5,325 | $5,099 | $4,071 |
| Net Debt / EBITDA | 2.92 | 3.35 | 5.54 | 2.5 | 0.79 | 0.98 |
Weyerhaeuser Company has weak revenue growth and a flat capital expenditure trend, average net margins with a positive growth rate, and irregular cash flows. In addition, we note a decent current ratio. We also note that the company benefits from positive EPS growth and healthy leverage. Furthermore, Weyerhaeuser Company's financial statements do not display any obvious red flags.
