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West Fraser Timber Co (TSE:WFG)
TSX:WFG
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West Fraser Timber Co
(TSX:WFG)
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Rating:54Neutral
Price Target:
C$99.00
▲(2.18% Upside)
West Fraser Timber Co's overall stock score reflects significant financial challenges, including declining revenue and profitability. While the balance sheet is strong, operational inefficiencies and market headwinds weigh heavily. Technical analysis provides mixed signals, and valuation metrics suggest potential overvaluation. The earnings call underscores the need for strategic adjustments amid ongoing market challenges.
West Fraser Timber Co (WFG) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$7.44B
Dividend Yield1.87%
Average Volume (3M)222.51K
Price to Earnings (P/E)3150.3
Beta (1Y)0.88
Revenue Growth-8.31%
EPS Growth-191.58%
CountryCA
Employees9,700
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)-0.53
Shares Outstanding76,576,170
10 Day Avg. Volume226,398
30 Day Avg. Volume222,513
Financial Highlights & Ratios
PEG Ratio14.46
Price to Book (P/B)1.01
Price to Sales (P/S)1.13
P/FCF Ratio40.22
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue1.28
Enterprise Value/Gross Profit4.62
Enterprise Value/Ebitda15.91
Forecast
1Y Price Target
$121.40Price Target Upside25.30% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
West Fraser Timber Co Business Overview & Revenue Model
Company DescriptionWest Fraser Timber Co. Ltd. (WFG) is a leading North American wood products company based in Canada, primarily engaged in the production of lumber, engineered wood products, and wood chips. Operating across various sectors of the forestry industry, West Fraser serves residential and commercial construction markets, providing products that include plywood, oriented strand board (OSB), and specialty wood products. The company emphasizes sustainable forestry practices and operates numerous sawmills, panel mills, and wood processing facilities across North America.
How the Company Makes MoneyWest Fraser Timber Co. generates revenue primarily through the sale of wood products, with key revenue streams including lumber sales, engineered wood products, and by-products such as wood chips and sawdust. The company benefits from its diversified product offerings, allowing it to serve a wide range of customers in the construction and manufacturing industries. Additionally, West Fraser engages in strategic partnerships and joint ventures that enhance its supply chain and market reach. Factors contributing to its earnings include fluctuations in lumber prices, demand in the housing market, and the company's ability to efficiently manage its production processes while maintaining sustainable forestry practices.
West Fraser Timber Co Earnings Call Summary
Earnings Call Date:Jul 23, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted a strong balance sheet and improvements in the European segment, but faced significant declines in EBITDA across key segments, market challenges, and increased duties impacting financial results.Q2-2025 Updates
Positive Updates
Strong Balance Sheet
West Fraser exited Q2 with nearly $1.7 billion of available liquidity and a strong cash position net of debt, reflecting a robust capital allocation strategy.
European Business Improvement
The European business posted $2 million of adjusted EBITDA in Q2, a sequential improvement from negative $2 million in Q1, linked to higher OSB pricing and shipments.
Cash Flow Increase
Cash flow from operations was $285 million in Q2, with net cash balance increasing to $310 million from $156 million in the prior quarter.
Credit Facility Extension
Successfully amended and extended a $1 billion credit facility and increased a term loan from $200 million to $300 million.
Negative Updates
Decline in Lumber and North America EWP EBITDA
The Lumber segment posted $15 million in adjusted EBITDA, down from $66 million in Q1. North America EWP segment generated $68 million, down from $125 million in Q1, due to lower pricing and inventory valuation adjustments.
Pulp and Paper Segment Loss
The Pulp and Paper segment reported negative $1 million of adjusted EBITDA, compared to $7 million in Q1, impacted by an inventory write-down.
Market Challenges
New home construction and remodeling demand were subdued due to elevated mortgage and interest rates, impacting U.S. housing demand.
Softwood Lumber Duties Increase
Preliminary CVD and ADD rates resulted in a combined rate of 26.05%, potentially increasing export duties payable by $65 million.
Company Guidance
During West Fraser's second quarter 2025 earnings call, the company provided guidance indicating ongoing challenges in their Lumber and North American Oriented Strand Board (OSB) segments due to softer-than-expected demand levels. This was attributed to ongoing issues with housing affordability and subdued repair and remodeling markets. The company revised its 2025 shipment guidance for SPF, SYP, and North American OSB, reflecting these market conditions. The call highlighted West Fraser's strong balance sheet, with $1.7 billion in available liquidity and a net cash balance of $310 million, which supports their capital allocation strategy. Despite the cyclical downturn, the company remains focused on cost control, optimizing its mill portfolio, and preparing for various trade-related scenarios, including potential tariffs and a Section 232 investigation into U.S. lumber imports. West Fraser's strategic capital investments aim to enhance operational resilience and position the company for future growth opportunities.West Fraser Timber Co Financial Statement Overview
Summary
West Fraser Timber Co is facing financial headwinds with declining revenues and profitability. Despite a strong balance sheet with low leverage, negative return on equity and declining cash flows are concerning. The company needs to address operational inefficiencies and improve cash generation.Income Statement
West Fraser Timber Co has experienced declining revenue and profitability over recent periods. The TTM data shows a negative net profit margin of -2.18% and a negative EBIT margin of -1.87%, indicating operational challenges. The gross profit margin remains moderate at 27.77%, but revenue growth has been negative, reflecting a contraction in sales.45
Neutral
Balance Sheet
The company's balance sheet is relatively stable with a low debt-to-equity ratio of 0.05, suggesting conservative leverage. However, the return on equity is negative at -1.82%, indicating inefficiencies in generating returns for shareholders. The equity ratio is strong, showing a solid foundation of equity relative to total assets.65
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth, down by 43.95% in the TTM period. The operating cash flow to net income ratio is 0.80, indicating some challenges in converting income into cash. The free cash flow to net income ratio is 0.17, suggesting limited cash generation relative to net income.50
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.84B | 6.17B | 6.44B | 9.79B | 10.43B | 4.36B |
| Gross Profit | 1.62B | 1.84B | 1.76B | 4.60B | 5.82B | 1.81B |
| EBITDA | 471.17M | 654.38M | 534.72M | 3.23B | 4.48B | 1.02B |
| Net Income | -127.02M | ― | -166.60M | 1.99B | 2.92B | 586.09M |
Balance Sheet | ||||||
| Total Assets | 8.75B | 8.75B | 9.35B | 10.07B | 10.33B | 4.17B |
| Cash, Cash Equivalents and Short-Term Investments | 644.63M | 640.62M | 893.53M | 1.17B | 1.55B | 459.83M |
| Total Debt | 328.30M | 228.86M | 534.13M | 541.26M | 522.04M | 513.09M |
| Total Liabilities | 1.87B | 1.80B | 2.18B | 2.38B | 2.75B | 1.70B |
| Stockholders Equity | 6.88B | 6.95B | 7.17B | 7.69B | 7.58B | 2.47B |
Cash Flow | ||||||
| Free Cash Flow | 112.08M | 180.88M | 72.15M | 1.67B | 2.83B | 793.53M |
| Operating Cash Flow | 553.54M | 644.49M | 556.89M | 2.14B | 3.46B | 982.32M |
| Investing Cash Flow | -439.45M | -343.67M | -586.36M | -461.83M | -281.20M | -173.90M |
| Financing Cash Flow | -443.62M | -528.35M | -247.96M | -2.04B | -2.09B | -340.76M |
West Fraser Timber Co Technical Analysis
Positive
96.89
Price Trends
99.10
Negative
100.01
Negative
106.04
Negative
Market Momentum
-1.05
Negative
48.91
Neutral
41.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:WFG, the sentiment is Positive. The current price of 96.89 is above the 20-day moving average (MA) of 96.34, below the 50-day MA of 99.10, and below the 200-day MA of 106.04, indicating a neutral trend. The MACD of -1.05 indicates Negative momentum. The RSI at 48.91 is Neutral, neither overbought nor oversold. The STOCH value of 41.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:WFG.
West Fraser Timber Co Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $4.48B | 13.71 | 17.05% | 1.49% | -0.26% | -4.15% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
60 Neutral | C$293.60M | 20.33 | 4.24% | 8.47% | -26.79% | -57.05% | |
55 Neutral | $458.97M | ― | -11.53% | ― | -7.60% | 50.15% | |
54 Neutral | $7.44B | 3,150.31 | -1.80% | 1.87% | -8.31% | -191.58% | |
52 Neutral | $1.43B | ― | -19.38% | ― | -1.38% | -64.10% | |
46 Neutral | C$127.33M | ― | -3.84% | ― | 3.89% | 49.05% |
* Basic Materials Sector Average
TSE:WFG
West Fraser Timber Co
96.89
-39.97
-29.20%
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West Fraser Timber Co Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
West Fraser Enhances Liquidity with Credit Facility Renewal
Positive
Jun 2, 2025
West Fraser Timber Co. Ltd. has announced the renewal and extension of its $1 billion credit facility to May 2030 and an increase in its term loan to $300 million, maturing in May 2028. This strategic financial move enhances the company’s liquidity and financial flexibility, positioning it strongly for future operations and stability in the wood products industry.
The most recent analyst rating on (TSE:WFG) stock is a Buy with a C$125.00 price target. To see the full list of analyst forecasts on West Fraser Timber Co stock, see the TSE:WFG Stock Forecast page.
Business Operations and Strategy
West Fraser Releases 2024 Sustainability Report Highlighting Key Achievements
Positive
May 22, 2025
West Fraser Timber Co. Ltd. has released its 2024 Sustainability Report, highlighting significant achievements in environmental, social, and governance goals. Key accomplishments include enhanced safety training, a substantial reduction in carbon emissions, sustainable forest management, partnerships with Indigenous Nations, and community investments. These initiatives underscore West Fraser’s commitment to sustainability and responsible resource management, potentially strengthening its industry position and stakeholder relationships.
The most recent analyst rating on (TSE:WFG) stock is a Buy with a C$125.00 price target. To see the full list of analyst forecasts on West Fraser Timber Co stock, see the TSE:WFG Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.