We've been asking ourselves recently if the market has placed a fair valuation on Weyerhaeuser. 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'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 38.2 and a P/B ratio of 2.04.
Weyerhaeuser has moved -18.9% over the last year compared to 25.1% for the S&P 500 — a difference of -44.0%. Weyerhaeuser has a 52 week high of $36.27 and a 52 week low of $26.73.
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 | $27.77 |
| P/E Ratio | 26.88 | -222.3 | 21.23 | 9.23 | 14.34 | 24.15 |
| 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 | 14.38 |
| 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.
