Plum Creek Timber Co. Inc. PCL is expected to report first-quarter 2015 results on Apr 27, after the market closes.
Last quarter, the company posted a positive earnings surprise of 11.8%. In fact, in all the four preceding quarters, Plum Creek posted positive earning surprises with an annual average beat of 8.8%.
Let’s see how things have shaped up for this announcement.
Factors to Consider This Quarter
Despite a geographically diversified private-timberland portfolio, Plum Creek’s prospects in the lumber and wood production industry will likely be hurt by sluggish growth in the residential construction market. In fact, the company anticipates this tempered pace to continue in 2015 as well, projecting housing starts to climb to just 1.1 million in the year.
In addition, increasingly stringent environmental norms as well as intensified competition from substitute products pose challenges before the company. All these will be reflected in the first-quarter 2015 results.
Further, the company intends to adhere to conservative operational plans in 2015. It anticipates slow growth in lumber production in the year due to higher demand from repair and remodel markets.
Nevertheless, the company’s geographically diversified private timberland portfolio, higher demand for lumber and southern saw log, and a healthy balance sheet bode well for the future.
Plum Creek’s activities during the quarter were inadequate to win analysts’ confidence. Consequently, the Zacks Consensus Estimate remained stable at 22 cents per share over the last 7 days.
Earnings Whispers
Our proven model does not conclusively show that Plum Creek will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zero Zacks ESP: That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 22 cents per share. This means 0.00% earnings ESP.
Zacks Rank #4: Plum Creek’s Zacks Rank #4 (Sell), when combined with 0.00% Earnings ESP, makes surprise prediction difficult.
Note that, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
You could consider other stocks in the REIT sector that have the combination of a positive Earnings ESP and a favorable Zacks Rank, and are hence poised for an earnings beat this quarter:
FelCor Lodging Trust Inc. FCH has an Earnings ESP of +10.00% and a Zacks Rank #3. The company will report first-quarter results on Apr 29.
Public Storage PSA has an Earnings ESP of +1.03% and a Zacks Rank #3. The company will report first-quarter results on Apr 30.
Essex Property Trust Inc. ESS has an Earnings ESP of +0.90% and a Zacks Rank #3. The company will report first-quarter results on May 6.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment