CatchMark Timber Trust (NYSE: CTT) and Potlatch Corporation (NASDAQ:PCH) are both timber reits companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, profitability, risk and dividends.

Institutional & Insider Ownership

63.1% of CatchMark Timber Trust shares are owned by institutional investors. Comparatively, 84.3% of Potlatch Corporation shares are owned by institutional investors. 1.2% of CatchMark Timber Trust shares are owned by insiders. Comparatively, 1.5% of Potlatch Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

CatchMark Timber Trust has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Potlatch Corporation has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.

Valuation & Earnings

This table compares CatchMark Timber Trust and Potlatch Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
CatchMark Timber Trust $81.86 million 7.01 -$11.07 million ($0.35) -37.74
Potlatch Corporation $599.10 million 3.63 $10.93 million $2.16 24.77

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

Dividends

CatchMark Timber Trust pays an annual dividend of $0.54 per share and has a dividend yield of 4.1%. Potlatch Corporation pays an annual dividend of $1.50 per share and has a dividend yield of 2.8%. CatchMark Timber Trust pays out -154.3% of its earnings in the form of a dividend. Potlatch Corporation pays out 69.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Potlatch Corporation has raised its dividend for 2 consecutive years. CatchMark Timber Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings for CatchMark Timber Trust and Potlatch Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CatchMark Timber Trust 0 0 1 0 3.00
Potlatch Corporation 3 3 0 0 1.50

CatchMark Timber Trust currently has a consensus target price of $12.50, indicating a potential downside of 5.37%. Potlatch Corporation has a consensus target price of $47.00, indicating a potential downside of 12.15%. Given CatchMark Timber Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe CatchMark Timber Trust is more favorable than Potlatch Corporation.

Profitability

This table compares CatchMark Timber Trust and Potlatch Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CatchMark Timber Trust -15.09% -3.64% -1.90%
Potlatch Corporation 13.54% 54.42% 9.75%

Summary

Potlatch Corporation beats CatchMark Timber Trust on 10 of the 16 factors compared between the two stocks.

CatchMark Timber Trust Company Profile

CatchMark Timber Trust, Inc. is a real estate company investing in timberlands. The Company primarily engages in the ownership, management, acquisition and disposition of timberlands located in the United States. It is focused on investing in timberlands and to manage such assets to provide current income and attractive long-term returns to its stockholders. It owns all its properties and other investments through its operating partnership. The Company generates its income from the harvest and sale of timber, as well as from non-timber related revenue sources, such as recreational leases. In April 2014, the Company acquired 36,300 acres of timberland (known as the Waycross-Panola properties) located in Southeast Georgia and East Texas from Hancock Timber Resource Group. Approximately 55,600 acres of prime timberlands, known as Oglethorpe and Satilla River, add 2.7 million tons of timber to the Company’s merchantable inventory.

Potlatch Corporation Company Profile

Potlatch Corporation is a real estate investment trust (REIT), which is primarily engaged in activities associated with timberland management, including the sale of timber, management of timberlands, and purchase and sale of timberlands. The Company is also engaged in the manufacture and sale of wood products. It operates through three segments: Resource, Wood Products and Real Estate. Its primary objectives include using its timberland investments to generate income and maximizing the long-term value of its assets. Its Resource segment manages its timberlands. Its Wood Products segment manufactures and markets lumber, plywood and residual products at mills located in Arkansas, Idaho, Michigan and Minnesota. The activities of its Real Estate segment consist primarily of the sale of non-core timberlands in the categories of higher and better use (HBU), rural recreational real estate and non-strategic properties.

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