Critical Analysis: Potlatch (NASDAQ:PCH) & Boise Cascade (NYSE:BCC)

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

Insider and Institutional Ownership

86.1% of Potlatch shares are owned by institutional investors. Comparatively, 96.2% of Boise Cascade shares are owned by institutional investors. 1.0% of Potlatch shares are owned by insiders. Comparatively, 1.0% of Boise Cascade shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Potlatch and Boise Cascade, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potlatch	0	1	6	0	2.86
Boise Cascade	1	3	3	0	2.29

Potlatch currently has a consensus price target of $48.57, suggesting a potential upside of 20.86%. Boise Cascade has a consensus price target of $125.00, suggesting a potential upside of 35.58%. Given Boise Cascade’s higher probable upside, analysts clearly believe Boise Cascade is more favorable than Potlatch.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Potlatch	4.35%	2.36%	1.46%
Boise Cascade	4.72%	14.36%	8.95%

Earnings & Valuation

This table compares Potlatch and Boise Cascade”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potlatch	$1.10 billion	2.87	$21.88 million	$0.61	65.88
Boise Cascade	$6.62 billion	0.52	$376.35 million	$8.01	11.51

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

Dividends

Potlatch pays an annual dividend of $1.80 per share and has a dividend yield of 4.5%. Boise Cascade pays an annual dividend of $0.84 per share and has a dividend yield of 0.9%. Potlatch pays out 295.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Boise Cascade pays out 10.5% of its earnings in the form of a dividend. Boise Cascade has increased its dividend for 6 consecutive years.

Risk and Volatility

Potlatch has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Boise Cascade has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Summary

Boise Cascade beats Potlatch on 11 of the 17 factors compared between the two stocks.

About Potlatch

PotlatchDeltic Corporation (Nasdaq: PCH) is a leading Real Estate Investment Trust (REIT) that owns nearly 2.2 million acres of timberlands in Alabama, Arkansas, Georgia, Idaho, Louisiana, Mississippi and South Carolina. Through its taxable REIT subsidiary, the company also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. PotlatchDeltic, a leader in sustainable forest management, is committed to environmental and social responsibility and to responsible governance.

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.