- Weyerhaeuser's second quarter earnings could well be the high-water mark for earnings from its Wood Products business, as record lumber and OSB prices drove EBITDA margins into the 50%'s.
- Prices have come down significantly from their early summer highs, but strong residential housing activity should keep a floor in ahead of capacity additions in 2022/23.
- Weyerhaeuser's capital allocation policy limits management's flexibility; the company would likely benefit from investing more of this windfall into long-term upgrade/efficiency projects to lock in low-cost production capacity.
- Weyerhaeuser shares looks undervalued, but they don't offer the sort of sustained income that typical REIT investors want, nor the growth upside of non-REIT stocks.
For further details see:
Weyerhaeuser Facing Weaker Prices, Limited Flexibility, And Mixed Appeal