Critical Survey: Potlatch (NASDAQ:PCH) and BlueLinx (NYSE:BXC)

Potlatch (NASDAQ:PCH) and BlueLinx (NYSE:BXC) are both construction companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, valuation, earnings, risk, analyst recommendations and profitability.

Institutional & Insider Ownership

86.1% of Potlatch shares are owned by institutional investors. Comparatively, 90.8% of BlueLinx shares are owned by institutional investors. 1.0% of Potlatch shares are owned by insiders. Comparatively, 3.8% of BlueLinx shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility & Risk

Potlatch has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, BlueLinx has a beta of 1.59, indicating that its share price is 59% more volatile than the S&P 500.

Profitability

This table compares Potlatch and BlueLinx’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Potlatch	3.94%	2.10%	1.29%
BlueLinx	0.96%	3.48%	1.39%

Earnings and Valuation

This table compares Potlatch and BlueLinx”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potlatch	$1.12 billion	2.87	$21.88 million	$0.82	50.49
BlueLinx	$2.95 billion	0.16	$53.12 million	$1.70	35.74

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Potlatch and BlueLinx, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potlatch	1	2	4	0	2.43
BlueLinx	1	1	2	0	2.25

Potlatch currently has a consensus price target of $49.20, suggesting a potential upside of 18.84%. BlueLinx has a consensus price target of $88.67, suggesting a potential upside of 45.93%. Given BlueLinx’s higher probable upside, analysts plainly believe BlueLinx is more favorable than Potlatch.

Summary

BlueLinx beats Potlatch on 9 of the 14 factors compared between the two stocks.

About Potlatch

PotlatchDeltic Corporation (Nasdaq: PCH) is a leading Real Estate Investment Trust (REIT) that owns nearly 2.2 million acres of timberlands in Alabama, Arkansas, Georgia, Idaho, Louisiana, Mississippi and South Carolina. Through its taxable REIT subsidiary, the company also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. PotlatchDeltic, a leader in sustainable forest management, is committed to environmental and social responsibility and to responsible governance.

About BlueLinx

BlueLinx Holdings Inc., together with its subsidiaries, engages in the distribution of residential and commercial building products in the United States. It distributes specialty products, including engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products; and structural products, such as lumber, plywood, oriented strand boards, rebars and remesh, as well as other wood products that are used for structural support in construction projects. It also provides various value-added services and solutions to customers and suppliers. The company serves national home centers, pro dealers, cooperatives, specialty distributors, regional and local dealers, and industrial manufacturers. BlueLinx Holdings Inc. was incorporated in 2004 and is headquartered in Marietta, Georgia.