Analyzing Rayonier (NYSE:RYN) and Trex (NYSE:TREX)

Trex (NYSE:TREX) and Rayonier (NYSE:RYN) are both mid-cap construction companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Profitability

This table compares Trex and Rayonier’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trex	17.69%	22.78%	14.66%
Rayonier	30.09%	3.29%	1.74%

Earnings and Valuation

This table compares Trex and Rayonier”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trex	$1.15 billion	5.76	$226.39 million	$1.82	33.98
Rayonier	$1.26 billion	2.91	$359.15 million	$2.33	10.12

Rayonier has higher revenue and earnings than Trex. Rayonier is trading at a lower price-to-earnings ratio than Trex, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Trex has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500. Comparatively, Rayonier has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Trex and Rayonier, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trex	1	7	8	1	2.53
Rayonier	0	3	1	0	2.25

Trex currently has a consensus target price of $74.88, suggesting a potential upside of 21.08%. Rayonier has a consensus target price of $27.75, suggesting a potential upside of 17.73%. Given Trex’s stronger consensus rating and higher probable upside, research analysts clearly believe Trex is more favorable than Rayonier.

Insider and Institutional Ownership

96.0% of Trex shares are owned by institutional investors. Comparatively, 89.1% of Rayonier shares are owned by institutional investors. 0.7% of Trex shares are owned by company insiders. Comparatively, 0.9% of Rayonier shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Trex beats Rayonier on 10 of the 15 factors compared between the two stocks.

About Trex

Trex Company, Inc. manufactures and distributes composite decking, railing, and outdoor living products and accessories for residential and commercial markets in the United States. It offers decking products and accessories under the names Trex Transcend, Trex Select, Trex Signature, Trex Transcend Lineage, and Trex Enhance for protection against fading, staining, mold, and scratching; Trex Hideaway, a hidden fastening system; and Trex DeckLighting, a LED dimmable deck lighting for use on posts, floors, and steps. The company also provides Trex Transcend Railing products that are used in Trex decking products and other decking materials; Trex Select Railing products for a simple clean finished look; Trex Enhance Railing system; Trex Signature aluminum railing for a contemporary look; and Trex Select T-Rail railing products. In addition, it offers Trex Seclusions, a fencing product that includes structural posts, bottom and top rails, pickets, and decorative post caps. Further, the company acts as a licensor in various licensing agreements with third parties to manufacture and sell products under the Trex name, including Trex Outdoor Furniture; Trex RainEscape, an above joist deck drainage system; Trex Pergola, a cellular PVC product; Trex Latticeworks outdoor lattice boards; Trex Cornhole boards; Diablo Trex Blade, a saw blade for wood-alternative composite decking; Trex SpiralStairs and structural steel posts; and Trex Outdoor Kitchens, cabinetry, and Storage products. It sells its products through wholesale distributors, retail lumber dealers, and Home Depot and Lowe’s stores. Trex Company, Inc. was founded in 1996 and is headquartered in Winchester, Virginia.

About Rayonier

Rayonier is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. As of December 31, 2023, Rayonier owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South (1.85 million acres), U.S. Pacific Northwest (418,000 acres) and New Zealand (421,000 acres).