A month has gone by since the last earnings report for Rayonier (RYN). Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rayonier due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Rayonier's Q1 Net Income Beats Estimates, Revenues Fall
Rayonier reported first-quarter 2019 pro-forma net income per share of 19 cents, surpassing the Zacks Consensus Estimate of 10 cents. The bottom line benefited from higher operating income in the company’s Southern Timber and Trading segments.
However, both net income and revenues witnessed year-over-year declines. The company reported net income per share of 31 cents in the year-ago quarter while revenues for the quarter came in at $191.5 million, falling nearly 5.8% year over year. Also, it missed the Zacks Consensus Estimate of $193.2 million.
Rayonier’s performance was affected by lower operating income in the New Zealand Timber segment and the Real Estate segment. Further, the Pacific Northwest Timber and corporate and other segments witnessed net loss during the quarter.
During the reported quarter, operating income in the company’s Southern Timber segment came in at $21.5 million, soaring 76.2% from the year-ago tally of $12.2 million. The Pacific Northwest Timber posted operating loss of $3.7 million as against $4.7 million of operating income recorded in first-quarter 2018.
The New Zealand Timber reported operating income of $15.7 million, down 1.8% from the year-earlier tally. Real Estate’s operating income was $10 million, 64.4% lower than the year-ago figure of $28.1 million.
The Trading segment’s operating income was $0.5 million, up from the year-earlier figure of $0.1 million.
Lastly, the Corporate and Other segment posted operating loss of $5.5 million, wider than loss of $4 million reported in the year-earlier quarter.
Rayonier ended the first quarter with $154.6 million in cash and cash equivalents, up from $148.4 million recorded as of Dec 31, 2018. Total long-term debt was $972.7 million, marginally up from $972.6 million as on Dec 31, 2018.
In its Southern Timber segment, Rayonier anticipates lower quarterly harvest volumes for the rest of the year. Nonetheless, the company expects to achieve its full-year volume guidance as it experienced above-average stumpage removals in the first quarter. It also believes average pricing in Southern Timber will improve modestly.
In the Pacific Northwest Timber segment, the company expects to achieve its full-year volume guidance with increased harvest volumes in the second half of the year. It expects any prospective pricing improvements to be largely dependent on resolution of the U.S.-China trade dispute.
Further, in its New Zealand Timber segment, the company expects to achieve the full-year volume guidance with increased quarterly harvest volumes for the rest of the year. It projects year-over-year pricing to be relatively stable with some fluctuations from quarter to quarter.
Finally, Rayonier expects to achieve its full-year adjusted EBITDA guidance in the Real Estate segment. However, quarterly results may vary.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -17.24% due to these changes.
At this time, Rayonier has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Rayonier has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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