Not good but stabilizing.
I think that’s the best way to describe Potlatch’s (PCH) third quarter earnings reported after the market close on October 26.
Log prices remain low but, the company says, are stabilizing. Sales of higher, better use land—timberland that’s more valuable for development than for timber production—remains slow at a total of 812 acres sold in the quarter, but the company is still selling land and that 812 acres sold is better than the 327 acres sold in the third quarter of 2008.
And the company continues to make progress on getting its books into better shape. In the quarter Potlatch sold a timber deed to a timber investment group for $49 million. The proceeds went to pay down part of the company’s credit line.
The short-term result was a quarter that beat Wall Street estimates of $1.11 a share by 4 cents a share. And where revenues climbed by 25.2% from the third quarter of 2008 to $164 million, well above the $150 million consensus.
I don’t think this stock will give investors significant capital appreciation until the housing market turns. (Whenever that might be.) But in the meantime, I think the company is doing the right things to make sure it can keep paying my Dividend Income portfolio and investors who are following that list a yield of 7.1%.