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Plum Creek Soars to New 52-Week High

Zacks Equity Research

Shares of Plum Creek Timber Company Inc. (PCL) reached a new 52-week high touching $50.55 in the mid trading session on Thursday, Mar 21, 2013, as it gained momentum following decent fourth-quarter 2012 results. The closing price of this real estate investment trust (:REIT) on Mar 21, 2013, was $50.19, representing a solid year-to-date return of 11.5%. The average trading volume over the last 3 months was 0.9 million shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left given its strong estimate revisions following the earnings release.

Growth Drivers

We believe that Plum Creek’s diversified timber and land base enables it to benefit from large economies of scale. Its deal with Drax and Vulcan Materials will auger well for its top line. In addition, the upsurge in demographic trends driving housing markets and demand for real estate properties across the country provides a strong backdrop for the company to demonstrate its solid financial performance in the future.

On Jan 28, Plum Creek reported impressive fourth quarter 2012 results. The company’s earnings per share reached $0.49, significantly surpassing the Zacks Consensus Estimate of $0.29 and the year–ago quarter earnings of $0.38. For full-year 2012, Plum Creek reported earnings of $1.25 per share, up from $1.19 per share earned a year ago. Results also exceeded the Zacks Consensus Estimate of $1.05 per share. The better-than expected results were driven by increasing demand for wood products stemming from a recovery in the residential construction market, leading to improved performance by the timber, real estate and manufacturing businesses.  

Notably, Plum Creek has now delivered positive earnings surprises in 3 straight quarters with an average beat of 23.2%.

Estimate Revisions Show Potency

Over the last 60 days, 5 estimates for 2013 have been revised upward, lifting the Zacks Consensus Estimate by 2.2% to $1.40 per share. Furthermore, 2 estimates for 2014 have moved higher, raising the Zacks Consensus Estimate by 2.5% to $1.67 per share.

In addition to Plum Creek, a number of REITs touched a 52-week high yesterday. This includes BioMed Realty Trust Inc. (BMR), Health Care REIT Inc. (HCN) and The Macerich Company (MAC).

Read the Full Research Report on PCL

Read the Full Research Report on HCN

Read the Full Research Report on MAC

Read the Full Research Report on BMR

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