Plum Creek Timber Co. (NYSE: PCL) and Potlatch Corporation (NASDAQ:PCH) are both financials companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitabiliy, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Plum Creek Timber Co. and Potlatch Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Plum Creek Timber Co. 0 0 0 0 N/A
Potlatch Corporation 2 5 0 0 1.71

Potlatch Corporation has a consensus target price of $43.25, suggesting a potential downside of 8.76%. Given Potlatch Corporation’s higher possible upside, analysts plainly believe Potlatch Corporation is more favorable than Plum Creek Timber Co..

Institutional and Insider Ownership

83.9% of Potlatch Corporation shares are owned by institutional investors. 1.5% of Potlatch Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Plum Creek Timber Co. and Potlatch Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Plum Creek Timber Co. 10.53% 9.14% 2.73%
Potlatch Corporation 4.46% 42.10% 6.95%

Valuation and Earnings

This table compares Plum Creek Timber Co. and Potlatch Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Plum Creek Timber Co. N/A N/A N/A N/A N/A
Potlatch Corporation $620.88 million 3.10 $133.21 million $0.67 70.75

Potlatch Corporation has higher revenue and earnings than Plum Creek Timber Co..

Dividends

Potlatch Corporation pays an annual dividend of $1.50 per share and has a dividend yield of 3.2%. Plum Creek Timber Co. does not pay a dividend. Potlatch Corporation pays out 223.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Potlatch Corporation beats Plum Creek Timber Co. on 7 of the 10 factors compared between the two stocks.

Plum Creek Timber Co. Company Profile

Plum Creek Timber Company, Inc. (Plum Creek) is a private timberland owner in the United States. The Company operates through segments, including Northern Resources segment consists of timberlands in Maine, Michigan, Montana, New Hampshire, Oregon, Vermont, Washington, West Virginia and Wisconsin; Southern Resources segment consists of timberlands in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas, and Virginia; Energy and Natural Resources segment includes natural resource businesses that focus on opportunities for oil and natural gas production, construction aggregates and mineral extraction, wind power and communication and transportation rights of way; Real Estate segment consists of sales of higher value timberlands and non-strategic timberlands, and Other segment provides timber and wood-fiber procurement services. It owns approximately 6.6 million acres of timberlands located in over 19 states.

Potlatch Corporation Company Profile

Potlatch Corporation is a real estate investment trust (REIT), which is primarily engaged in activities associated with timberland management, including the sale of timber, management of timberlands, and purchase and sale of timberlands. The Company is also engaged in the manufacture and sale of wood products. It operates through three segments: Resource, Wood Products and Real Estate. Its primary objectives include using its timberland investments to generate income and maximizing the long-term value of its assets. Its Resource segment manages its timberlands. Its Wood Products segment manufactures and markets lumber, plywood and residual products at mills located in Arkansas, Idaho, Michigan and Minnesota. The activities of its Real Estate segment consist primarily of the sale of non-core timberlands in the categories of higher and better use (HBU), rural recreational real estate and non-strategic properties.

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