Financial Review: Boise Cascade (NYSE:BCC) & West Fraser Timber (NYSE:WFG)

Boise Cascade (NYSE:BCC) and West Fraser Timber (NYSE:WFG) are both mid-cap construction companies, but which is the better business? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, analyst recommendations, valuation and institutional ownership.

Dividends

Boise Cascade pays an annual dividend of $0.84 per share and has a dividend yield of 0.9%. West Fraser Timber pays an annual dividend of $1.28 per share and has a dividend yield of 1.7%. Boise Cascade pays out 10.5% of its earnings in the form of a dividend. West Fraser Timber pays out -752.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Boise Cascade has increased its dividend for 6 consecutive years and West Fraser Timber has increased its dividend for 3 consecutive years. West Fraser Timber is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

96.2% of Boise Cascade shares are owned by institutional investors. Comparatively, 40.2% of West Fraser Timber shares are owned by institutional investors. 1.0% of Boise Cascade shares are owned by company insiders. Comparatively, 1.8% of West Fraser Timber shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Boise Cascade and West Fraser Timber”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Boise Cascade	$6.72 billion	0.52	$376.35 million	$8.01	11.62
West Fraser Timber	$6.17 billion	0.94	-$5.00 million	($0.17)	-444.98

Boise Cascade has higher revenue and earnings than West Fraser Timber. West Fraser Timber is trading at a lower price-to-earnings ratio than Boise Cascade, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Boise Cascade has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, West Fraser Timber has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.

Profitability

This table compares Boise Cascade and West Fraser Timber’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Boise Cascade	4.72%	14.36%	8.95%
West Fraser Timber	0.03%	0.99%	0.78%

Analyst Recommendations

This is a summary of recent recommendations for Boise Cascade and West Fraser Timber, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Boise Cascade	1	3	3	0	2.29
West Fraser Timber	0	0	5	0	3.00

Boise Cascade currently has a consensus price target of $125.00, indicating a potential upside of 34.29%. West Fraser Timber has a consensus price target of $100.40, indicating a potential upside of 32.72%. Given Boise Cascade’s higher possible upside, research analysts plainly believe Boise Cascade is more favorable than West Fraser Timber.

Summary

Boise Cascade beats West Fraser Timber on 11 of the 17 factors compared between the two stocks.

About Boise Cascade

Boise Cascade Company engages in manufacture of wood products and distribution of building materials in the United States and Canada. It operates through two segments, Wood Products and Building Materials Distribution. The Wood Products segment manufactures laminated veneer lumber and laminated beams used in headers and beams; I-joists for residential and commercial flooring and roofing systems, and other structural applications; structural, appearance, and industrial plywood panels; and ponderosa pine shop lumber and appearance grade boards. The Building Materials Distribution segment distributes a line of building materials, including oriented strand boards, plywood, and lumber; general line items, such as siding, composite decking, doors, metal products, insulation, and roofing; and engineered wood products. It markets and sells its products to dealers, home improvement centers, wholesalers, specialty distributors, and industrial converters for use in the construction of new residential housing, repair-and-remodeling of existing housing, construction of light industrial and commercial buildings, and other industrial applications. Boise Cascade Company was incorporated in 2004 and is headquartered in Boise, Idaho.

About West Fraser Timber

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, douglas fir-larch, hem-fir, and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products, as well as particleboards. 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, paperboard products, tissue and towel products, and a variety of other paper grades. Further, it offers bioproducts, including bioenergy and biomaterial. Its products are used in home construction, repair and remodeling, papers, tissue, and box materials, and industrial applications. The company sells its products to major retail chains, contractor supply yards, and wholesalers, as well as industrial customers for further processing or as components for other products in Canada, the United States, the United Kingdom, Europe, and internationally. West Fraser Timber Co. Ltd. was founded in 1955 and is headquartered in Vancouver, Canada.