Potlatch Corporation (PCH) versus Weyerhaeuser (WY) Critical Comparison
Potlatch Corporation (NASDAQ: PCH) and Weyerhaeuser (NYSE:WY) are both construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, profitabiliy, risk, analyst recommendations, valuation, earnings and institutional ownership.
Insider and Institutional Ownership
83.4% of Potlatch Corporation shares are owned by institutional investors. Comparatively, 76.6% of Weyerhaeuser shares are owned by institutional investors. 1.5% of Potlatch Corporation shares are owned by insiders. Comparatively, 1.3% of Weyerhaeuser shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This table compares Potlatch Corporation and Weyerhaeuser’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings for Potlatch Corporation and Weyerhaeuser, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Potlatch Corporation currently has a consensus price target of $43.25, suggesting a potential downside of 10.08%. Weyerhaeuser has a consensus price target of $36.38, suggesting a potential upside of 5.65%. Given Weyerhaeuser’s stronger consensus rating and higher probable upside, analysts plainly believe Weyerhaeuser is more favorable than Potlatch Corporation.
Valuation and Earnings
This table compares Potlatch Corporation and Weyerhaeuser’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Potlatch Corporation||$620.88 million||3.15||$133.21 million||$0.67||71.79|
|Weyerhaeuser||$6.67 billion||3.88||$1.64 billion||$1.45||23.74|
Weyerhaeuser has higher revenue and earnings than Potlatch Corporation. Weyerhaeuser is trading at a lower price-to-earnings ratio than Potlatch Corporation, indicating that it is currently the more affordable of the two stocks.
Potlatch Corporation pays an annual dividend of $1.50 per share and has a dividend yield of 3.1%. Weyerhaeuser pays an annual dividend of $1.24 per share and has a dividend yield of 3.6%. 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 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 has increased its dividend for 5 consecutive years. Weyerhaeuser is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Potlatch Corporation has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500. Comparatively, Weyerhaeuser has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500.
Weyerhaeuser 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 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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