Comment by BB123456on Jul 09, 2021 9:53pm
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Post# 33525838
RE:RE:RE:RE:RE:Lumber prices
RE:RE:RE:RE:RE:Lumber pricesWas surpried the stock actually finished flat today (after a decent early morning bounce). I guess investors are dismissing the quarter's earnings as a 1-off and also may be thinking about the issues with margin pressure due to decreasing lumber prices which you mentioned.
I think Q3 should also be good as the Canadian housing and renovation market remain strong and they should be able to offset a lot of decreasing lumber prices. These guys are smart and understand how lumber prices move and would be planning to minimize hits to margins. A strong indicator of this is the fact that they could have easily increase margins in Q2 by more than they did if they were willing to take on more commodity risk, but that is not their business model.
I think the larger risk to GD's business is if the Canadian Housing market finally starts to slow, but in the meantime, business should remain fine and they are generating loads of cash that will likley be coming back as dividends.