Critical Analysis: West Fraser Timber (WFG) vs. Its Peers

West Fraser Timber (NYSE:WFG) is one of 15 publicly-traded companies in the “BLDG PRD – WOOD” industry, but how does it contrast to its rivals? We will compare West Fraser Timber to similar businesses based on the strength of its profitability, valuation, earnings, institutional ownership, analyst recommendations, dividends and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for West Fraser Timber and its rivals, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Fraser Timber	0	0	5	0	3.00
West Fraser Timber Competitors	193	1162	1101	48	2.40

West Fraser Timber currently has a consensus price target of $100.40, indicating a potential upside of 35.60%. As a group, “BLDG PRD – WOOD” companies have a potential upside of 23.42%. Given West Fraser Timber’s stronger consensus rating and higher probable upside, equities analysts clearly believe West Fraser Timber is more favorable than its rivals.

Dividends

West Fraser Timber pays an annual dividend of $1.28 per share and has a dividend yield of 1.7%. West Fraser Timber pays out -752.9% of its earnings in the form of a dividend. As a group, “BLDG PRD – WOOD” companies pay a dividend yield of 1.7% and pay out 36.6% of their earnings in the form of a dividend. West Fraser Timber has increased its dividend for 3 consecutive years.

Volatility & Risk

West Fraser Timber has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, West Fraser Timber’s rivals have a beta of 1.43, indicating that their average stock price is 43% more volatile than the S&P 500.

Earnings & Valuation

This table compares West Fraser Timber and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
West Fraser Timber	$6.17 billion	-$5.00 million	-435.53
West Fraser Timber Competitors	$4.92 billion	$297.37 million	-12.95

West Fraser Timber has higher revenue, but lower earnings than its rivals. West Fraser Timber is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares West Fraser Timber and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Fraser Timber	0.03%	0.99%	0.78%
West Fraser Timber Competitors	7.65%	10.27%	6.04%

Insider & Institutional Ownership

40.2% of West Fraser Timber shares are held by institutional investors. Comparatively, 82.9% of shares of all “BLDG PRD – WOOD” companies are held by institutional investors. 1.8% of West Fraser Timber shares are held by company insiders. Comparatively, 4.4% of shares of all “BLDG PRD – WOOD” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

West Fraser Timber rivals beat West Fraser Timber on 10 of the 15 factors compared.

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, douglas fir-larch, hem-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. Further, it offers bioproducts, including bioenergy and biomaterial. 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, and internationally. West Fraser Timber Co. Ltd. was founded in 1955 and is headquartered in Vancouver, Canada.