West Fraser (WFG) Buys Spray Lake Sawmills to Expand in Alberta
West Fraser Timber Co. WFG announced the completion of the acquisition of Spray Lake Sawmills. This move will help West Fraser boost its lumber and treated wood business, and expand its footprint in Alberta.
On Sep 6, 2023, the company announced that it signed a deal to acquire Spray Lake Sawmills for CAD $140 million ($103 million). The deal was closed after the completion of Canadian regulatory reviews and the satisfaction of customary conditions.
Located in Cochrane, AB, Spray Lake Sawmills produces treated wood products, dimensional lumber, and a variety of innovative wood residuals and byproducts . It has an annual lumber capacity of 155 million board feet. It holds two forest management agreements granted by the Government of Alberta, with a total annual allowable cut of 500,000 cubic meters.
In the third quarter of 2023, WFG’s total sales were $1.7 billion compared with $1.6 billion in the year-ago quarter. The Lumber segment’s adjusted EBITDA was $44 million.
The company continued to face challenging demand markets in the third quarter, particularly in the lumber segment, wherein West Fraser executed curtailments at several locations for planned capital upgrades and customer needs.
WFG expects total timber shipments in 2023 to be in line with that reported in 2022.
However, the company expects its financial flexibility and low cost position to continue to provide it with a competitive edge that will position it well to capitalize on the opportunities that lie ahead.
Price Performance
Shares of the company have lost 7.3% over the past year against the industry's 1.7% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
West Fraser currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Ryerson Holding Corporation RYI, Universal Stainless & Alloy Products, Inc. USAP and The Andersons Inc. ANDE. RYI sports a Zacks Rank #1 (Strong Buy), and USAP and ANDE carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ryerson’s fiscal 2022 earnings is pegged at 24 cents per share. The consensus estimate for 2024 earnings has been unchanged in the past 60 days. Its shares have gained 6.4% in a year.
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 27 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP’s shares gained 96% in the last year.
The consensus estimate for ANDE's current-year earnings has been revised 3.3% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average. ANDE shares have rallied around 32% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Andersons, Inc. (ANDE) : Free Stock Analysis Report
Universal Stainless & Alloy Products, Inc. (USAP) : Free Stock Analysis Report
Ryerson Holding Corporation (RYI) : Free Stock Analysis Report
West Fraser Timber Co. Ltd. (WFG) : Free Stock Analysis Report
