West Fraser Earnings: Lumber Markets Remain Constrained Due to Soft Demand and Ample Supply

No-moat-rated West Fraser reported lackluster fourth-quarter earnings that came with few surprises. Lumber markets remained constrained amid stalled housing markets and ample supply in North America. Net sales fell over 6% year over year in the fourth quarter as housing markets and repair and remodel activity remained muted. Pricing continues to be a headwind for West Fraser as it saw declines in both lumber and oriented strand board, or OSB, during the quarter, a trend that has persisted for much of the year. Nevertheless, we are maintaining our fair value estimates for New York Stock Exchange- and Toronto Stock Exchange-listed shares of $89 and CAD 120 per share, respectively.