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1. Company Snapshot

1.a. Company Description

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 and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products.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, specialty grades, and various tissue products.


It 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, China, Europe, Asia, and other countries.West Fraser Timber Co. Ltd.was founded in 1955 and is based in Vancouver, Canada.

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1.b. Last Insights on WFG

West Fraser Timber Co. Ltd.'s recent performance was positively driven by its strategic focus on long-term growth despite a challenging quarter with negative EBITDA. The company maintains a strong balance sheet. RBC Capital reaffirmed its Outperform rating, citing potential acquisition opportunities as the wood products market weakens. Additionally, West Fraser provided its 2026 operational outlook, including guidance for key product shipments, operational costs, and capital expenditures, indicating a proactive approach to navigating market challenges. (Source: RBC Capital)

1.c. Company Highlights

2. West Fraser's Q4 2025 Earnings: A Challenging Year with Signs of Operational Improvement

West Fraser reported a negative $79 million of adjusted EBITDA in Q4 2025, an improvement from the negative $144 million in the prior quarter. The company's financial performance was impacted by the challenging housing and repair and remodeling markets, which continued to face affordability pressures. For the full year 2025, adjusted EBITDA was $56 million, down significantly from $673 million in 2024. The actual EPS came out at '-18.05548', missing estimates at '-1.63'. Revenue growth for next year is estimated at 11.1% by analysts.

Publication Date: Feb -19

📋 Highlights
  • Q4 2025 Adjusted EBITDA:: -$79 million, improved from -$144 million in Q3 2025.
  • Full-Year 2025 Adjusted EBITDA:: $56 million, down from $673 million in 2024.
  • Liquidity Position:: $1.2 billion available liquidity at year-end, supporting capital allocation flexibility.
  • Henderson Mill Ramp-Up:: Positioned as a low-cost, high-efficiency asset in Texas, expected to replace existing volume.
  • Lumber/OSB Price Trend:: Recent 5-7% price increase driven by seasonal demand and supply constraints.

Operational Highlights

The lumber segment faced a protracted down cycle in 2025, but West Fraser made progress in high-grading its mill portfolio, including the closure or curtailment of higher-cost assets and the completion of the ramp-up of its Allendale OSB mill in South Carolina and the new Henderson lumber mill in Texas. As Sean McLaren, President and CEO, noted, "We have been actively investing in and improving the business, and because of that, we remain optimistic about West Fraser's future." The company is ramping up its modernized Henderson mill, which is expected to be one of the best mills in its fleet once it achieves full operating rates.

Balance Sheet and Liquidity

West Fraser had over $1.2 billion of available liquidity at year-end, providing financial flexibility and strength to support its capital allocation strategy through the cycle. The company's liquidity has trended lower over the last few years, but its financial position remains strong. With a Net Debt / EBITDA ratio of 0.66, West Fraser's balance sheet is well-positioned to navigate further economic challenges.

Valuation

West Fraser's current valuation metrics indicate a challenging financial situation. The P/E Ratio is -4.57, and the EV/EBITDA is 28.0, suggesting that the market is pricing in a significant improvement in earnings. The P/S Ratio is 1.0, and the ROE is -18.7%, indicating a difficult operating environment. The Dividend Yield is 1.82%, providing some support to the stock.

Outlook

West Fraser is cautiously optimistic about its demand outlook, driven by mixed sentiment from customers. The company is focusing on cost reduction and competitiveness, and is well-positioned to take advantage of any improvement in the market. As McLaren noted, "We are seeing a little bit more difficulty for our customers to get the product they're looking for at the time they're looking for it, which has had an impact on pricing." The recent lift in North American lumber and OSB prices is a positive sign, but it's too early to say if this is a cyclical recovery or just seasonal activity.

3. NewsRoom

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West Fraser Timber Co. Ltd. (WFG) Earns Outperform Rating Amid Supply Constraints

Feb -16

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Is West Fraser Timber (TSX:WFG) Attractive After Mixed Returns And Cash Flow Valuation Gap

Feb -14

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West Fraser Timber Q4 Earnings Call Highlights

Feb -13

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West Fraser Timber Co.Ltd (WFG) Q4 2025 Earnings Call Highlights: Strategic Investments and ...

Feb -12

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West Fraser Q4 Loss Widens to $751 Million on Tariffs, Impairment Charges

Feb -11

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WEST FRASER ANNOUNCES COMPLETION OF FORM 40-F FILING

Feb -11

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West Fraser Announces Fourth Quarter 2025 Results

Feb -11

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How Analyst Target Changes Are Reshaping The West Fraser Timber (TSX:WFG) Story

Jan -26

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.80%)

6. Segments

Lumber

Expected Growth: 4.83%

Strong demand from the US housing market, driven by low interest rates and government incentives, coupled with supply chain constraints and transportation bottlenecks, have contributed to the 4.83% growth of West Fraser Timber Co. Ltd.'s lumber segment.

North America Engineered Wood Products

Expected Growth: 4.83%

Strong demand for single-family housing and repair and remodeling activities in North America, driven by low interest rates and government incentives, contributed to the 4.83% growth of West Fraser Timber Co. Ltd.'s Engineered Wood Products segment. Additionally, the company's strategic investments in capacity expansion and product diversification also supported growth.

Pulp & Paper

Expected Growth: 4.5%

West Fraser Timber Co. Ltd.'s Pulp & Paper segment growth of 4.5% is driven by increasing demand for packaging materials, strong lumber prices, and cost savings from operational efficiencies. Additionally, the company's strategic acquisitions and investments in modernizing its mills have improved productivity and reduced costs, contributing to the segment's growth.

Europe Engineered Wood Products

Expected Growth: 4.83%

Strong demand for sustainable building materials, increasing adoption of engineered wood products in European construction, and West Fraser's strategic expansion into the region drive the 4.83% growth. Additionally, government initiatives promoting eco-friendly infrastructure development and rising consumer preference for environmentally responsible products contribute to the segment's growth.

7. Detailed Products

Lumber

West Fraser Timber Co. Ltd. offers a wide range of lumber products, including spruce-pine-fir, hemlock, and western red cedar, suitable for construction, renovation, and DIY projects.

Plywood

The company provides a variety of plywood products, including sheathing, flooring, and specialty panels, designed for durability and versatility.

Engineered Wood Products

West Fraser Timber Co. Ltd. offers engineered wood products, such as glue-laminated timber (Glulam) and laminated veneer lumber (LVL), for structural and non-structural applications.

Pulp and Paper Products

The company produces a range of pulp and paper products, including kraft pulp, packaging paper, and specialty papers.

Bioenergy

West Fraser Timber Co. Ltd. generates bioenergy from wood waste and other biomass sources, providing a renewable energy source.

8. West Fraser Timber Co. Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for West Fraser Timber Co. Ltd. is medium due to the availability of alternative materials such as steel and concrete for construction purposes.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the customer base and the lack of concentration of buyers in the timber industry.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of a few large suppliers of timber and the dependence of West Fraser Timber Co. Ltd. on these suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and regulatory barriers to entry in the timber industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the timber industry and the need for companies to compete on price and quality.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.93%
Debt Cost 6.09%
Equity Weight 93.07%
Equity Cost 14.35%
WACC 13.77%
Leverage 7.45%

11. Quality Control: West Fraser Timber Co. Ltd. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Stella-Jones

A-Score: 6.7/10

Value: 5.9

Growth: 8.1

Quality: 5.5

Yield: 4.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Acadian Timber

A-Score: 6.0/10

Value: 3.7

Growth: 5.1

Quality: 5.4

Yield: 9.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Reliance Steel & Aluminum

A-Score: 5.3/10

Value: 4.7

Growth: 6.1

Quality: 5.6

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
UFP Industries

A-Score: 5.3/10

Value: 6.2

Growth: 6.4

Quality: 5.8

Yield: 3.0

Momentum: 2.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Sylvamo

A-Score: 4.7/10

Value: 7.9

Growth: 3.4

Quality: 5.6

Yield: 6.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
West Fraser Timber Co

A-Score: 4.6/10

Value: 6.9

Growth: 4.1

Quality: 4.4

Yield: 3.0

Momentum: 1.5

Volatility: 7.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

92.0$

Current Price

92$

Potential

-0.00%

Expected Cash-Flows