Last Update09 Oct 25Fair value Decreased 3.51%
Analysts have lowered their average price target for Boise Cascade by approximately $3 to $96, citing the company's reduced earnings outlook and weaker Wood Products performance as key reasons for the adjustment.
Analyst Commentary
Industry analysts have provided updated commentary following Boise Cascade's recent earnings outlook and performance in its Wood Products division. Their assessments highlight both positive factors and ongoing concerns that could impact the company's future valuation and strategy.
Bullish Takeaways
- Despite the price target reductions, some analysts continue to maintain a positive long-term rating on Boise Cascade. They view the company's current valuation as attractive for investors seeking exposure to the sector.
- Bullish analysts note that the moderation in single-family housing starts is likely a cyclical factor. Boise Cascade remains well positioned to benefit when activity rebounds.
- Management's proactive adjustment to EBITDA guidance is seen as a prudent move. This improves transparency and demonstrates discipline in navigating uncertain market conditions.
Bearish Takeaways
- Bearish analysts express concern over ongoing demand challenges for engineered wood products. This has led to lower volumes and prices, pressuring overall profitability.
- Weaker absorption of fixed costs in the Wood Products segment raises questions about Boise Cascade's operational leverage and its ability to maintain margins in a slower market.
- The downward revision in Q3 consolidated EBITDA guidance suggests near-term growth may remain under pressure. This could weigh on the company's valuation and investor sentiment.
What's in the News
- Boise Cascade completed the repurchase of 4,046,136 shares, representing 10.42% of shares outstanding, as part of its ongoing buyback program for a total of $336.25 million. (Key Developments)
- Teamsters Local 190 went on strike at the company’s Billings, Montana facility, demanding higher wages and better health care after months of stalled negotiations. (Key Developments)
- The Board of Directors declared a 5% increase in quarterly dividends to $0.22 per share, payable September 17, 2025, for shareholders of record as of September 2, 2025. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target: Decreased modestly from $99.83 to $96.33, reflecting adjusted expectations for future performance.
- Discount Rate: Narrowly reduced from 8.30% to 8.29%, suggesting a slightly lower perceived risk.
- Revenue Growth: Down slightly from 1.80% to 1.74%, indicating more subdued top-line expansion forecasts.
- Net Profit Margin: Declined from 3.77% to 3.70%, resulting in slightly lower anticipated profitability.
- Future P/E: Lowered marginally from 16.53x to 16.27x. The valuation multiple was adjusted to reflect new profit outlooks.
Key Takeaways
- Modernized production and an expanded distribution network are improving efficiency, asset utilization, and Boise Cascade's ability to meet rising housing and remodeling demand.
- Secular trends in sustainability and demographic-driven housing needs are supporting consistent revenue and margin growth, aided by disciplined capital allocation.
- Diminished pricing power, soft construction demand, and high capital needs expose Boise Cascade to prolonged profit pressures, margin instability, and uncertain cash generation.
Catalysts
About Boise Cascade- Engages in manufacture and sale of engineered wood products (EWP) and plywood, and wholesale distribution of building materials in the United States and Canada.
- Ongoing investments in production modernization (e.g., completion of Oakdale mill and upcoming Thorsby line) are expected to enhance operational efficiency and output flexibility, supporting higher margins and earnings through lower operating costs and improved asset utilization.
- The company's national expansion and optimization of its distribution network-including new and expanded distribution centers-are strengthening its ability to capture incremental demand from a growing U.S. housing stock and remodeling activity, potentially boosting long-term revenue and EBITDA margins.
- Structural factors such as continued U.S. household formation, demographic tailwinds, and aging housing stock underpin a long runway of demand for Boise Cascade's engineered wood and building products, supporting sustained volume growth and top-line revenue expansion.
- Robust capital allocation, highlighted by regular dividends and a significant share repurchase program, reflects disciplined management and provides a pathway to higher EPS growth on top of consistent free cash flow generation.
- Increased adoption of sustainable construction methods and the value proposition of engineered wood products position Boise Cascade to benefit from secular trends in green building, widening its customer base and supporting both revenue growth and margin resilience.
Boise Cascade Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Boise Cascade's revenue will grow by 2.4% annually over the next 3 years.
- Analysts assume that profit margins will increase from 4.0% today to 4.1% in 3 years time.
- Analysts expect earnings to reach $285.8 million (and earnings per share of $8.54) by about September 2028, up from $262.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $347.3 million in earnings, and the most bearish expecting $249.0 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.7x on those 2028 earnings, up from 12.1x today. This future PE is lower than the current PE for the US Trade Distributors industry at 22.0x.
- Analysts expect the number of shares outstanding to decline by 2.78% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.28%, as per the Simply Wall St company report.
Boise Cascade Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Declining revenue and net income year-over-year-second quarter 2025 sales were down 3%, net income nearly halved from the prior year, and Wood Products segment EBITDA declined sharply due to lower pricing and volumes, indicating ongoing and potentially prolonged earning pressures.
- Persistent competitive pricing pressure and stagnant demand for engineered wood products and I-joists, coupled with sequential price declines (LVL and I-joist prices fell 3% and 2% respectively), suggest structurally limited pricing power that could negatively impact future gross margins and overall earnings.
- High operational leverage and sizable ongoing capital expenditures ($220–$240 million for 2025, including multi-year projects) expose Boise Cascade to risk if end-market demand fails to rebound, threatening returns on invested capital and compressing free cash flow.
- Management highlighted near-term and possibly extended headwinds for residential construction-affordability challenges, elevated existing home inventory, and consumer uncertainty-which may lead to continued volume declines and revenue volatility well into 2026.
- Exposure to commodity price fluctuations (for lumber, plywood, and OSB) and potential trade policy/tariff volatility, as noted in management's forward-looking statements, introduce ongoing risks to net margins and earnings stability due to unpredictable input and product pricing.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $103.667 for Boise Cascade based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.0 billion, earnings will come to $285.8 million, and it would be trading on a PE ratio of 15.7x, assuming you use a discount rate of 8.3%.
- Given the current share price of $85.29, the analyst price target of $103.67 is 17.7% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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