RE:RE:RE:RE:RE:Doubt very muchI can appreciate the logic that buying lumber at lower prices should allow Doman to maintain profit margins .. but it doesn't seem to work that way.
I picked a couple of quarters (3rd Q 2020 & 3rd Q 2019) where lumber futures were significantly different.
3rd Q 2019:
Lumber futures averaged about $370.
Profit Margin (Net Income to Revenue) = 1.7%
Gross Margin (Gross Profit to Revenue) =14.0%
EPS = .08
3rd Q 2020:
Lumber Futures averaged about $700.
Profit Margin = 6.6%
Gross Margin = 18.4%
EPS = .40
You can also see the trend this year where the EPS has gone from 48 cents to 24 cents to 13 cents as the futures have fallen from the $1,200 to $1,300 range in 1st Q.
There are of course other factors to consider and perhaps this correlation will eventually change (somewhat) with Doman's acquisitions over the last couple of years. The next 2 quarters should provide some answers.
After a few days over $500 a couple of weeks ago, lumber futures have dropped to the 300's for the last 2 days.