Timber stocks have wind beneath their wings and are hot picks on Forest Day.
Weyerhaeuser (WY) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
With what is arguably the year's most important number set to hit at 8:30 tomorrow when the Bureau of Labor Services reveals tomorrow's core CPI number (expected at 1.7%, just below December's 1.8%), traders are furiously betting and/or hedging whether the US economy is running hotter or cooler, amid concerns what a beat could send risk assets even lower. And while we don't know what the BLS will reveal tomorrow, to explore what is taking place at a far more granular level than the broad averages disclosed by the government, Goldman has analyzed the transcripts of America’s largest companies to identify where the bottom-up concern over rising costs is most acute. Specifically Goldman searches for commentary across industries around inflationary pressures with a specific focus on identifying trends in language topology around freight, logistics, wages and commodity costs. Each industry in is then scaled by overall sales. Here are Goldman's inflationary findings: Wages: Banks, Hotels, Construction, Restaurants & Leisure (among others) called out labor inflation most often with a prevalence of commentary around minimum wage increases and one-time bonuses on the back of tax reform. “This charge reflects higher-than-expected labor costs resulting from the strong demand for home remediation n services following Hurricanes Harvey and Irma.” - Weyerhaeuser Company, 4Q2017 “From an expense perspective, a tight labor market and competition for staff is expected to drive wage pressure in the 4% range, partially offset by flexing staff and managing non-labor costs. “ - Ventas, Inc, 4Q2017 “Moving minimum wage to $15, I mean, I’d love to sit here and tell you that we’re leading this country to some placewhere it isn’t, but that’s not the case.” - The Bank of New York Mellon Corporation, 4Q2017 Commodity costs: Input costs have moved markedly up across the commodity and feedstock complex. Not surprisingly, discussions around input costs and inflation were highest in the Industrials and Materials transcripts, though Consumer areas (Household Durables, Food and Staples Retailing) have not been immune. “We expect the price of certain LED components to continue to decline, though at a decelerating pace, while certain other costs, including certain components and commodity costs, especially steel prices, as well as certain employee-related costs primarily due...wage inflation and health care costs all to increase somewhat.” - Acuity Brands, 4Q2017 “It’s going to be about half of the inflation that we see spread between copper, steel and aluminum...what we also expect to see in 2018, is that Asia is performing differently than prior expectations so before 2017, i.e., they did take some steel capacity off-line. They’ve done other things that have kept some of their material inflation, actually pretty high compared to what you would normally see.” - Ingersoll-Rand, 4Q2017 Trucking/Transportation/Logistics: While most retailers have yet to report, many consumer companies have already spoken to higher freight and logistics costs. Heavy duty truck utilization is at a record level, with the market tight even before new regulations around electronic time logging took effect at the start of the year. “Now our productivity efforts start with funding-the-growth, and we have seen and did see in the fourth quarter increased logistics costs given fuel and availability.” - Colgate Palmolive Company, 4Q2017 “This included 110 basis points of higher commodity costs, reflecting the hurricane-related pressures n we discussed last quarter as well as 90 basis points of higher logistics costs, driven in part by a further tightening of the transportation market.” - Clorox Company, 4Q2017 Finally, this was the the inflationary pressure across the S&P looks like on the eve of the "most important CPI report ever."
Weyerhaeuser Company – WY (NYSE)
Weyerhaeuser Company's (WY) fourth-quarter 2017 earnings benefit from higher Timberlands and Wood Products sales, partially offset by rise in cost of sales.
Weyerhaeuser's (WY) fourth-quarter 2017 results are likely to be driven by improving U.S. housing market and high repair and remodeling activities. Rise in costs and competition remain issues.
Universal Forest Products (UFPI) will gain from its internationally diversified business and synergistic benefits from acquired assets. Returning high value to shareholders remains a priority.
Let's discuss the growth drivers and potential risks for EMCOR (EME).
Third Avenue Real Estate Value Investor Fund (TVRVX) seeks growth of capital for the long run
Weyerhaeuser (WY) has seen solid earnings estimate revision activity over the past month, and belongs to a strong industry as well.
An increase of 3.2% in Weyerhaeuser's (WY) quarterly dividend rate reflect the company's strong cash position and its commitment toward rewarding its shareholders handsomely.
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