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West Fraser Timber Co.Ltd (TSX:WFG) Financial Strength : 7 (As of Mar. 2024)


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What is West Fraser Timber Co.Ltd Financial Strength?

West Fraser Timber Co.Ltd has the Financial Strength Rank of 7.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

West Fraser Timber Co.Ltd's Interest Coverage for the quarter that ended in Mar. 2024 was 8.29. West Fraser Timber Co.Ltd's debt to revenue ratio for the quarter that ended in Mar. 2024 was 0.08. As of today, West Fraser Timber Co.Ltd's Altman Z-Score is 3.33.


Competitive Comparison of West Fraser Timber Co.Ltd's Financial Strength

For the Lumber & Wood Production subindustry, West Fraser Timber Co.Ltd's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


West Fraser Timber Co.Ltd's Financial Strength Distribution in the Forest Products Industry

For the Forest Products industry and Basic Materials sector, West Fraser Timber Co.Ltd's Financial Strength distribution charts can be found below:

* The bar in red indicates where West Fraser Timber Co.Ltd's Financial Strength falls into.



West Fraser Timber Co.Ltd Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

West Fraser Timber Co.Ltd's Interest Expense for the months ended in Mar. 2024 was C$-9 Mil. Its Operating Income for the months ended in Mar. 2024 was C$79 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Mar. 2024 was C$302 Mil.

West Fraser Timber Co.Ltd's Interest Coverage for the quarter that ended in Mar. 2024 is

Interest Coverage=-1*Operating Income (Q: Mar. 2024 )/Interest Expense (Q: Mar. 2024 )
=-1*78.509/-9.475
=8.29

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

West Fraser Timber Co.Ltd's Debt to Revenue Ratio for the quarter that ended in Mar. 2024 is

Debt to Revenue Ratio=Total Debt (Q: Mar. 2024 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(406.08 + 301.853) / 8809.228
=0.08

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

West Fraser Timber Co.Ltd has a Z-score of 3.33, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 3.33 is strong.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


West Fraser Timber Co.Ltd  (TSX:WFG) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

West Fraser Timber Co.Ltd has the Financial Strength Rank of 7.


West Fraser Timber Co.Ltd Financial Strength Related Terms

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West Fraser Timber Co.Ltd (TSX:WFG) Business Description

Traded in Other Exchanges
Address
c/o West Fraser Group, 858 Beatty Street, Vancouver, BC, CAN, V6B 1C1
West Fraser Timber is a softwood lumber company that also produces wood panels and pulp products. The company produces its wood products globally, with lumber mills in British Columbia, Alberta, Europe, and the southeastern United States. Following its acquisition of Norbord in 2021, West Fraser is now one of the largest oriented strand board, or OSB, producers in the world.

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