Potlatch Corporation (NASDAQ: PCH) and Weyerhaeuser Company (NYSE:WY) are both construction companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitabiliy.

Valuation and Earnings

This table compares Potlatch Corporation and Weyerhaeuser Company’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Potlatch Corporation $620.88 million 2.95 $133.21 million $0.67 67.24
Weyerhaeuser Company $6.67 billion 3.61 $1.64 billion $1.45 22.11

Weyerhaeuser Company has higher revenue and earnings than Potlatch Corporation. Weyerhaeuser Company is trading at a lower price-to-earnings ratio than Potlatch Corporation, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Potlatch Corporation has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500. Comparatively, Weyerhaeuser Company has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Potlatch Corporation and Weyerhaeuser Company, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Potlatch Corporation 2 6 0 0 1.75
Weyerhaeuser Company 1 3 5 1 2.60

Potlatch Corporation currently has a consensus target price of $43.25, indicating a potential downside of 4.00%. Weyerhaeuser Company has a consensus target price of $36.38, indicating a potential upside of 13.46%. Given Weyerhaeuser Company’s stronger consensus rating and higher probable upside, analysts clearly believe Weyerhaeuser Company is more favorable than Potlatch Corporation.

Dividends

Potlatch Corporation pays an annual dividend of $1.50 per share and has a dividend yield of 3.3%. Weyerhaeuser Company pays an annual dividend of $1.24 per share and has a dividend yield of 3.9%. 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. Weyerhaeuser Company pays out 85.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Weyerhaeuser Company has raised its dividend for 5 consecutive years. Weyerhaeuser Company is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

83.3% of Potlatch Corporation shares are owned by institutional investors. Comparatively, 77.4% of Weyerhaeuser Company shares are owned by institutional investors. 1.5% of Potlatch Corporation shares are owned by insiders. Comparatively, 1.3% of Weyerhaeuser Company shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Potlatch Corporation and Weyerhaeuser Company’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Potlatch Corporation 4.46% 42.10% 6.95%
Weyerhaeuser Company 16.58% 6.22% 2.83%

Summary

Weyerhaeuser Company beats Potlatch Corporation on 13 of the 17 factors compared between the two stocks.

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.

Weyerhaeuser Company Company Profile

Weyerhaeuser Company is a timber, land and forest products company. As of December 31, 2016, the Company owned or controlled 13.1 million acres of timberlands, primarily in the United States, and manages additional timberlands under long-term licenses in Canada. The Company’s segments include Timberlands; Real Estate, Energy and Natural Resources (Real Estate & ENR), and Wood Products. The Timberlands segment’s offerings include logs, timber and recreational access via leases. The Real Estate & ENR segment includes sales of timberlands; rights to explore for and extract hard minerals, oil and gas production, and coal, and equity interests in its Real Estate Development Ventures. The Wood Products segment includes the manufacturing and distribution of wood products. The Wood Products segment is engaged in softwood lumber, engineered wood products, structural panels, medium density fiberboard and building materials distribution.

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