Financial Analysis: Weyerhaeuser (WY) and CatchMark Timber Trust (CTT)
Weyerhaeuser (NYSE: WY) and CatchMark Timber Trust (NYSE:CTT) are both construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, valuation, risk, analyst recommendations and dividends.
Weyerhaeuser pays an annual dividend of $1.28 per share and has a dividend yield of 3.6%. CatchMark Timber Trust pays an annual dividend of $0.54 per share and has a dividend yield of 4.1%. Weyerhaeuser pays out 112.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CatchMark Timber Trust pays out -158.8% of its earnings in the form of a dividend. Weyerhaeuser has raised its dividend for 2 consecutive years and CatchMark Timber Trust has raised its dividend for 5 consecutive years. CatchMark Timber Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Weyerhaeuser has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500. Comparatively, CatchMark Timber Trust has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500.
This is a summary of current recommendations and price targets for Weyerhaeuser and CatchMark Timber Trust, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|CatchMark Timber Trust||0||0||1||0||3.00|
Weyerhaeuser currently has a consensus target price of $37.11, suggesting a potential upside of 5.46%. CatchMark Timber Trust has a consensus target price of $12.50, suggesting a potential downside of 4.21%. Given Weyerhaeuser’s higher probable upside, research analysts plainly believe Weyerhaeuser is more favorable than CatchMark Timber Trust.
Institutional & Insider Ownership
74.8% of Weyerhaeuser shares are held by institutional investors. Comparatively, 63.7% of CatchMark Timber Trust shares are held by institutional investors. 1.2% of Weyerhaeuser shares are held by insiders. Comparatively, 1.2% of CatchMark Timber Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Weyerhaeuser and CatchMark Timber Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Weyerhaeuser||$6.37 billion||4.17||$1.03 billion||$1.14||30.87|
|CatchMark Timber Trust||$81.86 million||6.92||-$11.07 million||($0.34)||-38.38|
Weyerhaeuser has higher revenue and earnings than CatchMark Timber Trust. CatchMark Timber Trust is trading at a lower price-to-earnings ratio than Weyerhaeuser, indicating that it is currently the more affordable of the two stocks.
This table compares Weyerhaeuser and CatchMark Timber Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|CatchMark Timber Trust||-15.09%||-3.64%||-1.90%|
Weyerhaeuser beats CatchMark Timber Trust on 11 of the 16 factors compared between the two stocks.
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.
CatchMark Timber Trust Company Profile
CatchMark Timber Trust, Inc. is a real estate company investing in timberlands. The Company primarily engages in the ownership, management, acquisition and disposition of timberlands located in the United States. It is focused on investing in timberlands and to manage such assets to provide current income and attractive long-term returns to its stockholders. It owns all its properties and other investments through its operating partnership. The Company generates its income from the harvest and sale of timber, as well as from non-timber related revenue sources, such as recreational leases. In April 2014, the Company acquired 36,300 acres of timberland (known as the Waycross-Panola properties) located in Southeast Georgia and East Texas from Hancock Timber Resource Group. Approximately 55,600 acres of prime timberlands, known as Oglethorpe and Satilla River, add 2.7 million tons of timber to the Company’s merchantable inventory.
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