Plum Creek Lumber - PCL

[BadThad]

Since I'm on a roll here, figured I'd post another one of my favorites. Can you tell I love dividends? LOL

PCL

Another lovely gem in my portfolio. Last dividend was 0.42 for a 3.84% yield. I mainly hold this stock because it's lumber, you simply can't go wrong in this business IMO. Lumber is always in demand and so is the land PCL owns. Take a look at their chart, personally, I see more growth in the future (pun intended). LOL

The Street.com rates it BUY:

RECOMMENDATION
We rate PLUM CREEK TIMBER CO INC (PCL) a BUY. A positive outlook for its real estate business for the year
along with the company’s initiatives to improve its Recreational Lease Management (RLM) business should
help PCL to improve its future financial performance. Also, its return-on-equity (ROE) continues to be higher
than its peers in the industry.
HIGHLIGHTS
Positive outlook for its real estate business. PCL continues to build its new pipeline of projects in
development land that create long term value. The demand for its small rural residential properties across
the country was sound during the quarter. PCL expects the demand growth to sustain and translate into
higher sales as the year progresses. For the full year FY07, the company expects its real estate revenues to
be between $330.00 million and $350.00 million, up 7.1%-13.6% from FY06.
Notable return on equity. Return-on-equity of the company as of the end of the quarter stood at 13.11%
primarily due to share repurchases. Its ROE surpassed its peers by a comfortable margin. During the quarter,
the company repurchased 5.76 million shares of its common stock at an average price of $37.85 per share. As
of March 31 2007, PCL had $72.00 million remaining under its current repurchase authorization, which could
further boost its near term ROE.
Initiatives to improve RLM. As part of PCL’s efforts to improve its RLM business, the company introduced RLM
program, which focuses on undertaking new projects and improving them by adding recreational facilities
and other amenities. The company had 13 of these projects as of the end of the quarter. Additionally, it has
signed 7 new joint venture agreements for properties in Florida, Georgia and South Carolina. Also, the
company is discussing another 7 new properties with prospective joint venture partners.
Risks to the BUY rating. Softer timber markets along with a slowdown in the housing market could continue
to lead to lower lumber and saw log demand. Additionally, the decline in lumber prices could potentially have
an adverse impact on its revenues.

FINANCIAL ANALYSIS
PCL operates in five segments: Northern Resource, Southern Resource, Real estate, Manufactured Products
and Other. The company reported a 10.9% decline in total revenue to $369.00 million. Revenue from the
Northern resources segment declined 16.0% to $99.00 million during the quarter, reflecting lower saw log
prices and harvest volumes. Revenue from the Southern resources was up 4.0% to $127.00 million. The real
estate segment posted a 56.0% decline in its revenues resulting from the sale of approximately 16,600 acres
of land. The Manufacturing segment’s revenue decreased 16.5%, to $115.00 million reflecting lower sales
volumes and lower lumber and plywood prices.
Total expenses for the company were up 2.0% to $294.00 million due to higher operating costs. As a result,
the operating margin of the company contracted 981 basis points to 20.86%. Apart from this, the interest
expense of the company grew by 16.1% to $36.00 million due to a greater debt burden. All told, net income
decreased 52.1%, to $45.00 million.
During the quarter cash flow from operating activities declined to $38.00 million compared to $140.00 million in
Q1 FY06. This was due to lower net income and higher working capital requirements. It raised $649.00 million
from borrowings using $577.00 million towards repayments of credit, $75.00 million on dividend payments and
$72.00 million for principal payments of long term debt. As a result, the company ended the quarter with lower
cash and equivalents of $210.00 million.
On the balance sheet, total assets of the company were down 5.3% to $4.58 billion. Shareholders’ equity
declined 15.0% to $2.04 billion primarily due to share repurchases. During the quarter, the company
repurchased 5.76 million shares of its common stock at an average price of $37.85 per share. As of march 31
2007, PCL had $72.00 million remaining under its current repurchase authorization.
On March 2, 2007, the company paid a quarterly cash dividend of $0.42 per share, representing an increase of
5.0%, to shareholders on record as of February 16.
On April 16, 2007, PCL announced the appointment of Thomas M. Lindquist as its executive vice president and
Chief Operating Officer (COO).
For the full year FY07, PCL expects real estate segment revenues to be between $330.00 million and $350.00
million (up 7.1%-13.6%). Earnings in Q2 FY07 are expected to be between $0.30 and 0.35 per share. For the
year, management expects earnings to be in the range of $1.40 to $1.60 per share, down from $1.74 per share
in FY06.

VALUATION
BUY. This stock's P/E ratio indicates a significant discount compared to an average of 68.58 for the Real
Estate Investment Trusts (REITs) industry and a premium compared to the S&P 500 average of 18.16. For
additional comparison, its price-to-book ratio of 3.48 indicates a premium versus the S&P 500 average of 2.91
and a premium versus the industry average of 3.46. The price-to-sales ratio is well above the S&P 500
average, but well below the industry average. The valuation analysis reveals that, PLUM CREEK TIMBER CO
INC seems to be trading at a discount to investment alternatives within the industry.

S&P rates it 3 stars
Ford rates it HOLD
Market Egde rates it HOLD
Jaywalk rates it HOLD

Todays Price for historical thread reference: $43.68

[BadThad]

Used to be one of my fav stocks, sold it long ago but I might buy back at these levels. The stock is down about 10% on revised guidance.

Current stock price: $30.00

Plum Creek Timber Co. Issues Q3 2009 EPS Guidance Below Analysts' Estimates; Narrows FY 2009 EPS Guidance
Monday, 27 Jul 2009 04:05pm EDT
Plum Creek Timber Co. announced that it expects third quarter 2009 earnings to be between $0.05-$0.10 per share. The Company expects to report earnings between $1.25-$1.40 per share for fiscal 2009 including the effect of the Wisconsin land sale. According to Reuters Estimates, analysts were expecting the Company to report EPS of $0.15 for the third quarter 2009; EPS of $1.29 for fiscal 2009.

[teenwolf41]

Interesting name with a strong yield. Got hammered today, but the dividend seems to be safe. Probably one of the few REIT related companies that haven't cut the dividend yet. Could be undervalued at only 8 points higher than its 52 week low.

[BadThad]

I was hoping to see it go under $30 today so I could start a new position....no such luck, investors saw opportunity with the stock price down and moved it up a little to $30.79....bummer considereding the DOW is red today.