Company Reports

We will discontinue analyst coverage of Weyerhaeuser on or about Nov. 12.

Net sales in the second quarter fell 2.8% year over year for Weyerhaeuser, driven by declines in its wood products and timberland businesses. This was somewhat offset by gains in the real estate business to due beneficial timing and mix of real estate sales in the quarter.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust and distributes its REIT income to shareholders without having to pay corporate-level income taxes. The firm operates with significant wood product production capacity in the United States and Canada. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2024 (86% in the US and 8% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.

No-moat-rated Weyerhaeuser reported first-quarter results in line with our expectations. Net sales fell roughly 2% year over year as all three segments experienced a decline. Higher lumber prices were largely offset by lower OSB prices in the quarter, but this was not a surprise given OSB prices have been retreating for some time. New OSB capacity has come online, which has increased supply in the US and weighed on prices. Lumber and wood product demand held up relatively well in the quarter but uncertainty around tariffs and global trade sets up a challenging remainder of the year. While Weyerhaeuser's direct exposure to new tariffs is somewhat limited, heightened economic uncertainty could weigh on construction spending, which would directly affect lumber and wood product markets. As such, we've decreased our fair value estimates to $32 from $35 due to lower near-term profitability in our forecast.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust, or REIT, and distributes its REIT income to shareholders without having to pay corporate level incomes taxes. The company operates with significant wood product production capacity in the United States and Canada. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2024 (86% in US and 8% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.

On March 4, the US implemented tariffs on Canadian lumber and wood products of 25%. This 25% tariff is in addition to the current 14.54% countervailing duty on lumber imports from Canada, bringing the total to almost 40%. For years the US has accused Canada of producing artificially low-priced lumber because timberland in Canada is largely owned by the government and it sets the stumpage fees. The US has argued that Canadian lumber producers benefit from artificially low timber prices while US producers pay market price for timber. The most recent policy for countervailing duties on Canadian lumber was set by the US in 2019 and revised to 14.52% in August 2024, with revised duties set for August 2025, where many expect a significant hike. It’s not clear yet if the new tariffs will last a few days, weeks, months, or longer, but prolonged tariffs and the expected increase in countervailing duties later this year could drive significant increases in lumber prices. While tariffs could have an adverse effect on lumber producers, we are leaving our fair value estimates in place.

No-moat-rated Weyerhaeuser reported fourth-quarter results that were largely in line with our expectations. Net sales fell roughly 3.5% year over year due to declines in the timberland business. A recovery in oriented strand board, or OSB, pricing and a sequential pickup in lumber volumes buoyed results in the fourth quarter and set up the company well going into the new year. OSB prices were pressured in the third quarter as industry capacity came online, but demand from single-family construction drove price growth. While prices in the wood products segment improved, a stagnant housing market and soft export demand remain a headwind for the firm. As such, we have maintained our $35 fair value estimate.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust, or REIT, and distributes its REIT income to shareholders without having to pay corporate level incomes taxes. The company operates with significant wood product production capacity in Canada and the United States. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2023 (85% in US and 7.5% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.

No-moat-rated Weyerhaeuser reported underwhelming third-quarter results, driven by challenging lumber markets. Net sales tumbled 17% year over year as all three segments experienced significant declines. Additionally, Weyerhaeuser reported a 4.6% operating margin in the quarter, down significantly from 17.5% a year ago and 14% last quarter. Lower lumber and oriented strand board, or OSB, prices weighed heavily on Weyerhaeuser's wood product business in the quarter while the timberlands segment navigated declining timber prices. That said, lumber and OSB prices improved through the third quarter, providing some optimism heading into 2025. As such, we have maintained our $35 fair value estimate.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust, or REIT, and distributes its REIT income to shareholders without having to pay corporate level incomes taxes. The company operates with significant wood product production capacity in Canada and the United States. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2023 (85% in US and 7.5% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.

No-moat-rated Weyerhaeuser reported second-quarter results that were largely in line with our expectations. Net sales declined 3% year over year as Weyerhaeuser continued to navigate challenging wood product markets. Consolidated operating margins declined roughly 200 basis points from a year ago to 13.9%. Housing markets remain a challenge for Weyerhaeuser as higher interest rates have stagnated existing home sales while repair and remodel demand remains soft. While some near-term pressures remain, strength in new residential construction should provide support to lumber markets until existing home sales recover. As such, we have maintained our $35 fair value estimate.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust, or REIT, and distributes its REIT income to shareholders without having to pay corporate level incomes taxes. The company operates with significant wood product production capacity in Canada and the United States. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2023 (85% in US and 7.5% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.

No-moat Weyerhaeuser reported first-quarter results that came mostly as we expected. Net sales declined 4.5% year over year as the wood products and timberland segments both saw declines. Weyerhaeuser and its competitors continue to navigate a challenging environment for wood products in North America due to a stagnant housing market and soft repair and remodel activity. Additionally, export markets remain pressured, especially in China, where demand was muted in the first quarter. That said, we expect growth in both single-family housing starts and repair and remodel markets in 2024, which should drive demand for both lumber and engineered wood products. We have maintained our $35 fair value estimate, as an increase from the time value of money was offset by slightly lower wood-product volumes in our forecast.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust, or REIT, and distributes its REIT income to shareholders without having to pay corporate level incomes taxes. The company operates with significant wood product production capacity in Canada and the United States. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2023 (85% in US and 7.5% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.

New single-family home sales increased 4% in 2023 to 666,000 units, as homebuilders capitalized on a dearth of existing for-sale inventory while also offering more sales incentives, cutting base home prices, and building smaller homes to improve affordability. By the fourth quarter of 2023, homebuilders began to pull back on sales incentives as the average 30-year fixed mortgage rate retreated from 7.62% in October 2023 to 6.64% in January 2024. However, mortgage rates have trended higher recently, and we now forecast the average 30-year fixed rate will be 6.50% in 2024, up from our previous forecast of 6.10%. Even so, that’s lower than the 2023 average of 6.81%, and we think homebuilders won’t hesitate to increase sales incentives if needed; they still enjoyed above-average gross profit margins last year with elevated incentives. As such, in 2024, we think new-home sales will increase 9% to 730,000 units and single-family housing starts will increase 4% to 985,000 units. However, we expect total housing starts will decline roughly 5% to 1,345,000 units due to a 23% decline in multifamily starts to 360,000 units, as there’s currently approximately 1,000,000 multifamily units under construction—the largest backlog in at least 50 years.

No-moat-rated Weyerhaeuser reported fourth-quarter results that were largely in line with our expectations. Weyerhaeuser navigated a challenging year as high interest rates constrained housing markets and weighed on lumber demand. Some of that weakness carried over to the fourth quarter as net sales declined roughly 2.5% year over year, while operating margins expanded 300 basis points to 15.7%, largely due to strength in the timberlands segment. Despite some end market improvements in the fourth quarter, Weyerhaeuser will have to navigate a tricky demand environment and ample industry supply in 2024. We've increased our fair value estimate to $35 per share from $34 due to the time value of money.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust, or REIT, and distributes its REIT income to shareholders without having to pay corporate level incomes taxes. The company operates with significant wood product production capacity in Canada and the United States. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2022 (85% in U.S. and 7% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.

New-home sales have rebounded since the spring of this year as sales incentives and price reductions have attracted buyers who have fewer options in the supply-constrained existing-home market. That said, homebuilder sentiment data tells us that smaller builders remain cautious. Even so, we forecast single-family starts to increase by 3% in 2024, to 0.92 million units. However, we project this increase in single-family starts will be more than offset by a 24% decline in multifamily starts, to 0.36 million units. Multifamily construction has been robust for the past three years, but a record construction backlog and higher construction and financing costs have tamed developers' appetite for new multifamily projects.

No-moat-rated Weyerhaeuser reported somewhat underwhelming third-quarter results as the company continued to navigate a challenging operating environment. Net sales fell over 11% year over year as the wood product and timberland segments recorded double-digit declines. The company's consolidated operating margins decreased roughly 250 basis points from a year ago to 17.5% but improved again sequentially due to solid performance in the wood products business. Nevertheless, Weyerhaeuser faces a difficult fourth quarter as higher mortgage rates constrain housing markets and limit demand for wood products. As such, we've decreased our fair value estimate to $34 from $35 due to our expectation of lower wood product volumes through 2023 than we had previously anticipated.

Weyerhaeuser is one of the world’s largest forest product producers and is the largest private timberland owner in North America. Weyerhaeuser is a real estate investment trust, or REIT, and distributes its REIT income to shareholders without having to pay corporate level incomes taxes. The company operates with significant wood product production capacity in Canada and the United States. Homebuilding, remodeling, and construction are the main uses of softwood lumber and engineered wood products in North America. Weyerhaeuser is closely tied to the North American market as it accounted for over 90% of revenue in 2022 (85% in U.S. and 7% in Canada). As price-takers, Weyerhaeuser and its peers see dramatic profit variations depending on the health of housing markets and overall economic conditions.