Weyerhaeuser shares fell by -2.0% during the day's afternoon session, and are now trading at a price of $31.66. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Weyerhaeuser'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 31.12 and an average price to book (P/B) ratio of 2.15. In contrast, Weyerhaeuser has a trailing 12 month P/E ratio of 31.0 and a P/B ratio of 2.29.
Weyerhaeuser's PEG ratio is 12.96, 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.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $7,476 | $6,554 | $7,532 | $10,201 | $10,184 | $7,674 |
| Operating Margins | 19% | 10% | 23% | 36% | 30% | 15% |
| Net Margins | 10% | -1% | 11% | 26% | 18% | 11% |
| Net Income (M) | $748 | -$76 | $797 | $2,607 | $1,880 | $839 |
| Net Interest Expense (M) | $375 | $378 | $351 | $313 | $270 | $280 |
| Depreciation & Amort. (M) | $486 | $510 | $472 | $477 | $480 | $500 |
| Diluted Shares (M) | 757 | 746 | 748 | 751 | 743 | 732 |
| Earnings Per Share | $0.99 | -$0.1 | $1.07 | $3.47 | $2.53 | $1.15 |
| EPS Growth | n/a | -110.1% | 1170.0% | 224.3% | -27.09% | -54.55% |
| Avg. Price | $26.61 | $22.23 | $22.72 | $32.11 | $36.27 | $31.66 |
| P/E Ratio | 26.88 | -222.3 | 21.23 | 9.23 | 14.34 | 27.53 |
| Free Cash Flow (M) | $744 | $909 | $1,473 | $3,104 | $2,779 | $1,376 |
| CAPEX (M) | $368 | $57 | $56 | $55 | $53 | $57 |
| EV / EBITDA | 13.83 | 19.47 | 10.11 | 6.61 | 8.85 | 16.07 |
| Total Debt (M) | $6,221 | $6,147 | $5,625 | $5,099 | $6,035 | $5,069 |
| Net Debt / EBITDA | 3.13 | 5.17 | 2.35 | 0.78 | 1.25 | 2.32 |
| Current Ratio | 0.83 | 1.6 | 1.69 | 3.29 | 1.58 | 2.94 |
Weyerhaeuser has generally positive cash flows and an excellent current ratio of 2.94. Additionally, the company's financial statements display positive EPS growth and healthy leverage levels. However, the firm suffers from slight revenue growth and decreasing reinvestment in the business and weak operating margins with a stable trend.
