West Fraser Timber (TSX:WFG) - Share price, News & Analysis

WFG fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	6/6
Financial Health	6/6
Dividends	4/6

WFG Stock Overview

Rewards

Trading at 58% below our estimate of its fair value

Earnings grew by 171.1% over the past year

Risk Analysis

Earnings are forecast to decline by an average of 67.2% per year for the next 3 years

West Fraser Timber Competitors

Price History & Performance

Summary of all time highs, changes and price drops for West Fraser Timber
Historical stock prices
Current Share Price	CA$97.63
52 Week High	CA$130.13
52 Week Low	CA$82.66
Beta	1.94
1 Month Change	-16.10%
3 Month Change	-9.47%
1 Year Change	13.16%
3 Year Change	63.53%
5 Year Change	59.06%
Change since IPO	1,805.87%

Recent News & Updates

Mar 23

Is West Fraser Timber Co. Ltd. (TSE:WFG) Trading At A 43% Discount?

Today we will run through one way of estimating the intrinsic value of West Fraser Timber Co. Ltd. ( TSE:WFG ) by...

Shareholder Returns

	WFG	CA Forestry	CA Market
7D	-4.0%	-2.6%	0.3%
1Y	13.2%	-10.2%	-4.0%

Return vs Industry: WFG exceeded the Canadian Forestry industry which returned -10.6% over the past year.

Return vs Market: WFG exceeded the Canadian Market which returned -4.1% over the past year.

Price Volatility

Is WFG's price volatile compared to industry and market?
WFG volatility
WFG Average Weekly Movement	6.1%
Forestry Industry Average Movement	6.3%
Market Average Movement	10.0%
10% most volatile stocks in CA Market	17.3%
10% least volatile stocks in CA Market	4.4%

Stable Share Price: WFG is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: WFG's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1955	11,000	Ray Ferris	https://www.westfraser.com

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. 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, specialty grades, and various tissue products.

West Fraser Timber Fundamentals Summary

How do West Fraser Timber's earnings and revenue compare to its market cap?
WFG fundamental statistics
Market Cap	US$6.78b
Earnings (TTM)	US$3.37b
Revenue (TTM)	US$11.29b

2.0x

P/E Ratio

0.6x

P/S Ratio

Is WFG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
WFG income statement (TTM)
Revenue	US$11.29b
Cost of Revenue	US$4.87b
Gross Profit	US$6.41b
Other Expenses	US$3.04b
Earnings	US$3.37b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	37.57
Gross Margin	56.81%
Net Profit Margin	29.88%
Debt/Equity Ratio	5.8%

How did WFG perform over the long term?

See historical performance and comparison

Dividends

1.6%

Current Dividend Yield

3%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is WFG undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for WFG?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for WFG. This is calculated by dividing WFG's market cap by their current preferred multiple.
What is WFG's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$6.78b

WFG key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.5x
Enterprise Value/EBITDA	1.1x
PEG Ratio	-0.03x

Price to Earnings Ratio vs Peers

How does WFG's PE Ratio compare to its peers?

WFG PE Ratio vs Peers

The above table shows the PE ratio for WFG vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	3.7x

Forward PE

Price-To-Earnings vs Peers: WFG is good value based on its Price-To-Earnings Ratio (2x) compared to the peer average (3.7x).

Price to Earnings Ratio vs Industry

How does WFG's PE Ratio compare vs other companies in the Global Forestry Industry?

Price-To-Earnings vs Industry: WFG is good value based on its Price-To-Earnings Ratio (2x) compared to the Canadian Forestry industry average (3.6x)

Price to Earnings Ratio vs Fair Ratio

What is WFG's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

WFG PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	2x
Fair PE Ratio	2.5x

Price-To-Earnings vs Fair Ratio: WFG is good value based on its Price-To-Earnings Ratio (2x) compared to the estimated Fair Price-To-Earnings Ratio (2.5x).

Share Price vs Fair Value

What is the Fair Price of WFG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: WFG (CA$97.63) is trading below our estimate of fair value (CA$232.71)

Significantly Below Fair Value: WFG is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: WFG's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is West Fraser Timber forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-67.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: WFG's earnings are forecast to decline over the next 3 years (-67.2% per year).

Earnings vs Market: WFG's earnings are forecast to decline over the next 3 years (-67.2% per year).

High Growth Earnings: WFG's earnings are forecast to decline over the next 3 years.

Revenue vs Market: WFG's revenue is expected to decline over the next 3 years (-16.7% per year).

High Growth Revenue: WFG's revenue is forecast to decline over the next 3 years (-16.7% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if WFG's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has West Fraser Timber performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

50.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: WFG has high quality earnings.

Growing Profit Margin: WFG's current net profit margins (29.9%) are higher than last year (21.4%).

Past Earnings Growth Analysis

Earnings Trend: WFG's earnings have grown significantly by 50.9% per year over the past 5 years.

Accelerating Growth: WFG's earnings growth over the past year (171.1%) exceeds its 5-year average (50.9% per year).

Earnings vs Industry: WFG earnings growth over the past year (171.1%) exceeded the Forestry industry 74.5%.

Return on Equity

High ROE: WFG's Return on Equity (39.4%) is considered high.

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Financial Health

How is West Fraser Timber's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: WFG's short term assets ($4.0B) exceed its short term liabilities ($1.1B).

Long Term Liabilities: WFG's short term assets ($4.0B) exceed its long term liabilities ($1.4B).

Debt to Equity History and Analysis

Debt Level: WFG has more cash than its total debt.

Reducing Debt: WFG's debt to equity ratio has reduced from 21.8% to 5.8% over the past 5 years.

Debt Coverage: WFG's debt is well covered by operating cash flow (732.1%).

Interest Coverage: WFG's interest payments on its debt are well covered by EBIT (210.7x coverage).

Balance Sheet

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Dividend

What is West Fraser Timber current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

1.59%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: WFG's dividend (1.59%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (2.03%).

High Dividend: WFG's dividend (1.59%) is low compared to the top 25% of dividend payers in the Canadian market (5.33%).

Stability and Growth of Payments

Stable Dividend: WFG's dividends per share have been stable in the past 10 years.

Growing Dividend: WFG's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (2.9%), WFG's dividend payments are thoroughly covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (3.6%), WFG's dividend payments are thoroughly covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

1.3yrs

Average management tenure

CEO

Ray Ferris (58 yo)

4.17yrs

Tenure

US$6,037,687

Compensation

Mr. Raymond W. Ferris, also known as Ray, has been President since April 19, 2018 and Chief Executive Officer since July 1, 2019 and served as the Chief Operating Officer of West Fraser Timber Co. Ltd. sin...

CEO Compensation Analysis

Compensation vs Market: Ray's total compensation ($USD6.04M) is about average for companies of similar size in the Canadian market ($USD4.78M).

Compensation vs Earnings: Ray's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: WFG's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.

Board Members

Experienced Board: WFG's board of directors are considered experienced (5.7 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: WFG insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/26 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31