Weyerhaeuser Earnings: an Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Weyerhaeuser (NYSE: WY  ) . The timber and forest products company has enjoyed a boom in the industry in 2012, and signs of a return to strength in the housing market could send the REIT's shares even higher. Let's take an early look at what's been happening with Weyerhaeuser over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on Weyerhaeuser

Analyst EPS Estimate

$0.20

Change from Year-Ago EPS

43.0%

Revenue Estimate

$1.8 billion

Change from Year-Ago Revenue

11.7%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo Finance.

Will Weyerhaeuser keep growing money on trees?
Analysts have been extremely optimistic about Weyerhaeuser's prospects for the current quarter. Even as the majority of companies have seen slight decreases in estimates, analysts have boosted their earnings-per-share call for Weyerhaeuser by a nickel over the past three months. The shares have followed suit, rising 10% since mid-October.

Timber has grabbed the attention of investors lately, with signs of increasing demand both from China as well as from rising home starts in the U.S. helping to support the market. Rivals Plum Creek (NYSE: PCL  ) and Potlatch (NASDAQ: PCH  ) get greater proportions of their overall revenues from raw timberlands than Weyerhaeuser, arguably giving them an advantage in the current environment. But Weyerhaeuser's assets are well-placed in Washington and Oregon, giving the company better access to coastal shipping options than Potlatch's massive Idaho acreage.

For Weyerhaeuser's wood-products division, the devastation of Hurricane Sandy will provide a temporary boost as rebuilding efforts continue in the coming months. That should help make up for any shortfall in its paper-products segment, with that industry having come under pressure due to increased use of electronic communications and consuming less paper.

In Weyerhaeuser's quarterly report, be sure to separate out short-term impacts of events like Sandy from the longer-term trends in the broader industry. By going past headline numbers to focus on segment results, you should get a better picture of how Weyerhaeuser is doing compared to its rivals.

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