In This Article:
Boise Cascade Company engages in the manufacture and sale of engineered wood products and plywood, along with wholesale distribution of building materials in the United States and Canada.
The company manufactures veneer lumber and laminated beams, as well as I-joists for residential and commercial flooring and roofing systems. Boise Cascade also distributes a line of building materials such as siding, composite decking, insulation, and metal products.
Based in Boise, Idaho, the company markets and sells its products to wholesalers, dealers, home improvement centers, and specialty distributors for use in the construction of new residential homes, existing housing, and industrial and commercial buildings.
The wood product manufacturer faces several headwinds. Earnings and revenue trends remain negative as the company struggles to adjust to shrinking demand. Price pressures within engineered wood products are making things more difficult for Boise Cascade. An uptick in raw materials, labor, and manufacturing costs represents another threat to the company’s prospects.
The Zacks Rundown
A Zacks Rank #5 (Strong Sell) stock, Boise Cascade BCC is a component of the Zacks Building Products - Wood industry group, which currently ranks in the bottom 15% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has over the past year:
Image Source: Zacks Investment Research
Also note that stocks in this group are relatively overvalued and are also projected to experience below-average earnings growth:
Image Source: Zacks Investment Research
Stocks in the bottom tiers of industries can often be intriguing short candidates. While individual stocks have the ability to outperform even when they’re part of a lagging industry, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
Along with many other building product stocks, BCC shares have been underperforming over the past year. The stock is hitting a series of lower lows and represents a compelling short opportunity as we head further into 2025.
Recent Earnings Misses & Deteriorating Outlook
Boise Cascade has fallen short of earnings estimates in two of the past three quarters. Just last month, the company reported fourth-quarter earnings of $1.78 per share, missing the Zacks Consensus Estimate by -2.2%.
The building materials distributor has posted an average earnings miss of -1.95% over the last two quarters. Consistently falling short of earnings estimates is a recipe for underperformance, and BCC is no exception.