WEF.TO  Western Forest Products Inc

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

1.11B

Vuru Grade

36.08/100

Current Price

$2.80
+0.04 (+1.45%)

Growth Price

$2.46
Overvalued by 11.99%

Stability Price

$0.69
Overvalued by 75.46%

Company Metrics

  • P/E 11.67
  • P/S 0.92
  • P/B 1.99
  • EPS 0.24
  • Cash ROIC 7.51%
  • Cash Ratio 0.17
  • Dividend 0.08 / 2.95 %
  • Avg. Vol. 927,498.00
  • Shares 396.43M
  • Market Cap. 1.11B

Company Description

Western Forest Products Inc. operates as an integrated softwood forest products company. The company involves in the harvesting of timber; reforestation; forest management; manufacture and sale of lumber and wood chips; sale of logs; and lumber remanufacturing. It processes logs, including hemlock, douglas fir, western red cedar, yellow cedar, and sitka spruce. Western Forest Products Inc. markets... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Time To Look At Western Forest Products
Seeking Alpha - Nov 30, 2016
Western Forest Products (OTCPK:WFSTF) is a timber company with a $740 million market cap whose operations are concentrated in British Columbia on Vancouver Island and on the coastal mainland.
Western Forest Products Found Its Place In The Forest: Niche Product Mix ...
Seeking Alpha - Jul 5, 2017
WEF has timber operations in Coastal B.C., an area that is not plagued by the Mountain Pine Beetle and an area conducive to international transport.
Western Forest Products' (WFSTF) CEO Don Demens on Q2 2017 Results - Earnings ...
Seeking Alpha - Aug 5, 2017
Western Forest Products' (WFSTF) CEO Don Demens on Q2 2017 Results - Earnings Call Transcript. Aug. 5.17 | About: ... I would now like to turn the meeting over to Mr. Don Demens, President and Chief Executive Officer of Western Forest Products. Mr ...
Western Forest Products permanently closes lumber remanufacturing plant
woodworkingnetwork.com - Jan 28, 2017
Western is an integrated Canadian forest products company and is the largest coastal British Columbia woodland operator and lumber producer.
Western Forest Products Indefinitely Curtails Somass Sawmill
Marketwired (press release) - Jul 27, 2017
VANCOUVER, BRITISH COLUMBIA--(Marketwired - July 27, 2017) - Western Forest Products Inc. (TSX:WEF) ("Western" or the "Company") today announced the indefinite curtailment of its Somass Sawmill, located in Port Alberni, B.C.
Western Forest Products shuts operations at Port Alberni, BC, sawmill - CBC.ca
Western Forest Products Announces Release Date of Second Quarter 2017 Results ...
Marketwired (press release) - Jun 30, 2017
VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 30, 2017) - Western Forest Products' (TSX:WEF) second quarter 2017 financial and operating results will be released on Wednesday, August 2, 2017.
Millar Western Forest Products Ltd. Announces Note Exchange Transaction ...
Yahoo Finance - Mar 8, 2017
EDMONTON, March 8, 2017 /CNW/ - Millar Western Forest Products Ltd. ("Millar Western" or the "Company") today announced a proposed exchange transaction (the "Note Exchange Transaction") in respect of the Company's US$210 million aggregate ...
Western Forest Products Inc. Announces Normal Course Issuer Bid
Marketwired (press release) - Aug 3, 2017
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 2, 2017) - Western Forest Products Inc. (TSX:WEF) ("Western" or the "Company") announced today that it has received approval from the Toronto Stock Exchange ("TSX") to launch a normal course ...
Western Forest Products posts growth in Q2 - Canadian Forest Industries
Atlas Holdings Becomes Majority Shareholder of Millar Western Forest Products
Business Wire (press release) - May 2, 2017
EDMONTON, Alberta--(BUSINESS WIRE)--Atlas Holdings LLC announced today that is has acquired a controlling stake in Millar Western Forest Products Ltd. following the successful completion of a note exchange transaction and share exchange transaction ...
Western Forest Products Inc. Confirms Record Date of Third Quarter 2017 Dividend
Marketwired (press release) - Jan 26, 2017
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 2, 2017) - Western Forest Products Inc. (TSX:WEF) ("Western" or the "Company") is pleased to confirm that a quarterly dividend of $0.02 per share will be paid with respect to the Company's third fiscal ...
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for WEF.TO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate WEF.TO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$2.80 Current Price

$2.46 Growth Price (DCF)

Overvalued by 11.99%


Growth Rate Assumed by Market: 6.35%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$0.69 Stability Price (EPV)

Overvalued by 75.46%


Discount Rate: 15.0%

$0.09 NCA Price

Overvalued by 96.84%

$1.76 Book Price

Overvalued by 36.97%


Poor Cash Return on Invested Capital over the past 5 years

WEF.TO has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

WEF.TO has only created $7.51 of cash for every $100 invested.
Figures in CAD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 25.70M 51.70M 37.50M 37.00M 71.80M
divided by
Invested Capital 495.00M 572.20M 598.10M 625.10M 645.90M
Cash ROIC 5.19% 9.04% 6.27% 5.92% 11.12%

Excellent Return on Equity over the past 5 years

Over the past 5 years, WEF.TO has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

WEF.TO has generated $18.38 of Earnings for every $100 of Shareholders' Equity.
Figures in CAD. Fiscal year ends in December
20122013201420152016
Net Income 29.10M 125.40M 68.40M 73.70M 94.20M
divided by
Stockholders' Equity 357.70M 382.40M 408.10M 455.90M 522.50M
Return on Equity 8.14% 32.79% 16.76% 16.17% 18.03%

Good Business Performance over the past 10 years

It's likely WEF.TO has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is WEF.TO has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

WEF.TO has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow -80.70M -70.00M 51.20M 16.90M 23.20M 25.70M 51.70M 37.50M 37.00M 71.80M

Good Balance Sheet

WEF.TO's Total Assets double Total Liabilities. Its financial position is adequate. Remember to check Shareholders' Equity to see if it's stable or growing. It's one of the best measures of whether a company is creating value for shareholders.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 4.90M 3.50M 8.10M 5.10M 15.30M 18.80M 5.60M 1.80M 9.40M 19.00M
Current Assets 322.40M 286.10M 159.20M 197.50M 228.90M 212.50M 217.20M 215.60M 250.70M 290.00M
Total Assets 815.70M 726.00M 576.00M 587.10M 618.40M 606.30M 670.50M 694.20M 743.40M 777.20M
Current Liabilities 239.50M 241.50M 121.80M 79.20M 95.10M 92.50M 92.70M 94.30M 108.90M 112.30M
Total Liabilities 419.70M 423.10M 298.50M 284.00M 271.20M 248.60M 288.10M 286.10M 287.50M 254.70M
Stockholder' Equity 396.00M 302.90M 277.50M 303.10M 347.20M 357.70M 382.40M 408.10M 455.90M 522.50M
Current Ratio 1.35 1.18 1.31 2.49 2.41 2.30 2.34 2.29 2.30 2.58
TL-to-TA 0.51 0.58 0.52 0.48 0.44 0.41 0.43 0.41 0.39 0.33

Consistent Reinvestment of Profits over the past 10 years

WEF.TO has consistently retained profits. This may put WEF.TO in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, WEF.TO can greatly improve their long-term economic picture.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings -155.90M -249.50M -324.80M -299.50M -279.90M -268.80M -146.10M -103.30M -57.20M 7.90M
Retained Earnings Growth - -60.04% -30.18% 7.79% 6.54% 3.97% 45.65% 29.30% 44.63% 113.81%

Highly Competitive Industry over the past 10 years

It's likely that WEF.TO is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely WEF.TO invests heavily in R&D and Sales, General & Administrative expenses.

Only $1.45 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income -55.80M -85.60M -75.30M 27.70M 24.00M 29.10M 125.40M 68.40M 73.70M 94.20M
divided by
Revenue 890.50M 814.80M 580.50M 667.90M 853.70M 925.40M 977.50M 1.04B 1.08B 1.19B
Net Profit Margin -6.27% -10.51% -12.97% 4.15% 2.81% 3.14% 12.83% 6.60% 6.81% 7.93%

Inconsistent Gross Profit Margins over the past 10 years

WEF.TO has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$23.26 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 100.40M 39.90M 25.40M 113.50M 853.70M 147.60M 213.20M 196.40M 201.10M 234.50M
divided by
Revenue 890.50M 814.80M 580.50M 667.90M 853.70M 925.40M 977.50M 1.04B 1.08B 1.19B
Gross Margin 11.27% 4.90% 4.38% 16.99% 100.00% 15.95% 21.81% 18.94% 18.59% 19.75%

High Capital Intensity over the past 10 years

WEF.TO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

70.93% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 26.50M 12.50M 8.90M 11.60M 19.40M 32.00M 59.00M 49.90M 62.10M 56.10M
divided by
Net Income -55.80M -85.60M -75.30M 27.70M 24.00M 29.10M 125.40M 68.40M 73.70M 94.20M
Capital Expenditure Ratio -47.49% -14.60% -11.82% 41.88% 80.83% 109.97% 47.05% 72.95% 84.26% 59.55%

No Dividend History over the past 10 years

WEF.TO has never distributed dividends or has recently suspended their dividend distribution.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 204.41M 204.41M 452.43M 474.78M 473.74M 476.14M 443.25M 396.89M 398.74M 399.05M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 1.56 0.20 0.20 0.78 0.84 1.26 1.93 2.64 2.24 1.89
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

WEF.TO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 204.41M 204.41M 452.43M 474.78M 473.74M 476.14M 443.25M 396.89M 398.74M 399.05M
Stock Bought Back - - -54.82% -4.71% 0.22% -0.51% 7.42% 11.68% -0.46% -0.08%
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