We have issued an updated research report on Plum Creek Timber Co. Inc. PCL on Dec 29, 2015.
Recently, Plum Creek and Weyerhaeuser Co. WY inked a merger deal to create a $23-billion timber, land and forest products company, the largest in the U.S. The combined entity will own over 13 million acres of productive timberland, which will help it reap economies of scale and capitalize on housing recovery.
Plum Creek’s diversified private timberland portfolio enables it to offset several negative effects of cyclical commodity pricing. Further, the Seattle, WA-based timberland real estate investment trust’s (“REIT”) strong balance sheet positions it well to meet the commitments made to its shareholders.
Notably, last October, Plum Creek had announced third-quarter 2015 earnings per share of 58 cents, comfortably beating the Zacks Consensus Estimate of 51 cents as well as improving from the prior-year quarter figure of 34 cents.
However, Plum Creek’s business continues to face adverse effect from seasonality of the forest products industry and high volatility in price of logs and manufactured wood products. Further, increasingly strict environmental policies and cut-throat competition with national and local players pose concerns before the company.
Over the past one month, consensus estimates for the stock for 2015 and 2016 have remained unchanged at $1.09 and $1.37, respectively. Both Plum Creek and Weyerhaeuser currently carry a Zacks Rank #3 (Hold).
Stocks to Consider
Investors interested in the REIT space may consider stocks like Getty Realty Corp. GTY and Preferred Apartment Communities, Inc. APTS. Both stocks sport a Zacks Rank #1 (Strong Buy).
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