We believe the company should trade below the low end Canfor Corporation
Valuation
Our price target of $27 supports our Outperform rating. We value Canfor based on a 4.25x blended valuation multiple using our Trend EBITDA estimate of $875MM (85% weighting) and our 2024 EBITDA estimate of $415MM (15% weighting). We believe the company should trade below the low end of the typical range for Canadian Paper and Forest Products companies (5.0x to 7.0x),
due to the company’s heavier exposure to BC and an uncertain capital allocation strategy.
-Paul Quinn, RBC
The company is bleeding cash in BC, and all the M&A is draining cash from company coffers.
Quinn has a more upbeat appraisal of West Fraser, where he notes:
"strong operational performance, a solid balance sheet, and an emphasis on returning capital to shareholders"
The contrast in management performance and capital allocation is not lost on analysts.