Weyerhaeuser (NYSE:WY) vs. Trex (NYSE:TREX) Critical Review

Weyerhaeuser (NYSE:WY) and Trex (NYSE:TREX) are both construction companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitability and analyst recommendations.

Earnings & Valuation

This table compares Weyerhaeuser and Trex”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Weyerhaeuser	$7.04 billion	2.56	$396.00 million	$0.38	65.63
Trex	$1.15 billion	5.63	$226.39 million	$1.73	34.97

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

Volatility & Risk

Weyerhaeuser has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500. Comparatively, Trex has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Weyerhaeuser and Trex, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Weyerhaeuser	1	1	7	1	2.80
Trex	1	7	6	2	2.56

Weyerhaeuser currently has a consensus price target of $32.75, indicating a potential upside of 31.32%. Trex has a consensus price target of $71.93, indicating a potential upside of 18.90%. Given Weyerhaeuser’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Weyerhaeuser is more favorable than Trex.

Profitability

This table compares Weyerhaeuser and Trex’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Weyerhaeuser	3.97%	2.95%	1.73%
Trex	16.53%	21.27%	13.41%

Institutional & Insider Ownership

83.0% of Weyerhaeuser shares are owned by institutional investors. Comparatively, 96.0% of Trex shares are owned by institutional investors. 0.3% of Weyerhaeuser shares are owned by insiders. Comparatively, 0.7% of Trex shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Trex beats Weyerhaeuser on 9 of the 15 factors compared between the two stocks.

About Weyerhaeuser

Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control approximately 11 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products in North America. Our company is a real estate investment trust. In 2022, we generated $10.2 billion in net sales and employed approximately 9,200 people who serve customers worldwide. Our common stock trades on the New York Stock Exchange under the symbol WY.

About Trex

Trex Company, Inc. manufactures and distributes composite decking, railing, and outdoor living products and accessories for residential and commercial markets in the United States. It offers decking products and accessories under the names Trex Transcend, Trex Select, Trex Signature, Trex Transcend Lineage, and Trex Enhance for protection against fading, staining, mold, and scratching; Trex Hideaway, a hidden fastening system; and Trex DeckLighting, a LED dimmable deck lighting for use on posts, floors, and steps. The company also provides Trex Transcend Railing products that are used in Trex decking products and other decking materials; Trex Select Railing products for a simple clean finished look; Trex Enhance Railing system; Trex Signature aluminum railing for a contemporary look; and Trex Select T-Rail railing products. In addition, it offers Trex Seclusions, a fencing product that includes structural posts, bottom and top rails, pickets, and decorative post caps. Further, the company acts as a licensor in various licensing agreements with third parties to manufacture and sell products under the Trex name, including Trex Outdoor Furniture; Trex RainEscape, an above joist deck drainage system; Trex Pergola, a cellular PVC product; Trex Latticeworks outdoor lattice boards; Trex Cornhole boards; Diablo Trex Blade, a saw blade for wood-alternative composite decking; Trex SpiralStairs and structural steel posts; and Trex Outdoor Kitchens, cabinetry, and Storage products. It sells its products through wholesale distributors, retail lumber dealers, and Home Depot and Lowe’s stores. Trex Company, Inc. was founded in 1996 and is headquartered in Winchester, Virginia.