Western Forest Products (OTCMKTS:WFSTF) and West Fraser Timber (NYSE:WFG) Head to Head Analysis

Western Forest Products (OTCMKTS:WFSTF) and West Fraser Timber (NYSE:WFG) are both basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Institutional & Insider Ownership

75.3% of Western Forest Products shares are held by institutional investors. Comparatively, 46.2% of West Fraser Timber shares are held by institutional investors. 1.8% of West Fraser Timber shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Western Forest Products and West Fraser Timber’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Forest Products	N/A	N/A	N/A	$0.26	2.65
West Fraser Timber	$9.70 billion	0.65	$1.98 billion	($0.72)	-104.60

West Fraser Timber has higher revenue and earnings than Western Forest Products. West Fraser Timber is trading at a lower price-to-earnings ratio than Western Forest Products, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Western Forest Products and West Fraser Timber, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Forest Products	0	3	0	0	2.00
West Fraser Timber	0	1	3	1	3.00

Western Forest Products currently has a consensus target price of $2.53, indicating a potential upside of 261.17%. West Fraser Timber has a consensus target price of $113.13, indicating a potential upside of 50.21%. Given Western Forest Products’ higher probable upside, equities research analysts clearly believe Western Forest Products is more favorable than West Fraser Timber.

Profitability

This table compares Western Forest Products and West Fraser Timber’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Forest Products	N/A	N/A	N/A
West Fraser Timber	-0.74%	1.03%	0.79%

Dividends

Western Forest Products pays an annual dividend of $0.06 per share and has a dividend yield of 8.6%. West Fraser Timber pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Western Forest Products pays out 22.7% of its earnings in the form of a dividend. West Fraser Timber pays out -166.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

West Fraser Timber beats Western Forest Products on 8 of the 14 factors compared between the two stocks.

About Western Forest Products

Western Forest Products Inc. operates as an integrated forest products company in Canada, the United States, Japan, China, Europe, and internationally. The company is involved in the timber harvesting, sawmilling logs into specialty lumber, value-added lumber and glulam remanufacturing, and wholesaling purchased lumber activities. Its products have applications in outdoor living, exterior appearance, interior living, industrial, and structural applications. Western Forest Products Inc. was founded in 1955 and is headquartered in Vancouver, Canada.

About West Fraser Timber

West Fraser Timber Co. Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy. It offers spruce-pine-fir and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products, as well as particleboards. The company also provides northern bleached softwood Kraft pulp and bleached chemical thermo-mechanical pulp used to produce various paper products, including printing and writing papers, paperboard products, tissue and towel products, and a variety of other paper grades. Its products are used in home construction, repair and remodeling, papers, tissue, and box materials, and industrial applications. The company sells its products to major retail chains, contractor supply yards, and wholesalers, as well as industrial customers for further processing or as components for other products in Canada, the United States, the United Kingdom, Europe, Asia, and internationally. West Fraser Timber Co. Ltd. was founded in 1955 and is headquartered in Vancouver, Canada.