As of September 18, 2025, West Fraser Timber Co Ltd has a Discounted Cash Flow (DCF) derived fair value of $161.17 per share. With the current market price at $102.45, this represents a potential upside of 57.3%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $124.30 |
| DCF Fair Value (10-year) | $161.17 |
| Potential Upside (5-year) | 21.3% |
| Potential Upside (10-year) | 57.3% |
| Discount Rate (WACC) | 6.7% - 9.0% |
Revenue is projected to grow from $6174 million in 12-2024 to $7339 million by 12-2034, representing a compound annual growth rate of approximately 1.7%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 6174 | 4% |
| 12-2025 | 5722 | -7% |
| 12-2026 | 5836 | 2% |
| 12-2027 | 6012 | 3% |
| 12-2028 | 6183 | 3% |
| 12-2029 | 6307 | 2% |
| 12-2030 | 6562 | 4% |
| 12-2031 | 6915 | 5% |
| 12-2032 | 7054 | 2% |
| 12-2033 | 7195 | 2% |
| 12-2034 | 7339 | 2% |
Net profit margin is expected to improve from 0% in 12-2024 to 14% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | (5) | 0% |
| 12-2025 | 176 | 3% |
| 12-2026 | 324 | 6% |
| 12-2027 | 476 | 8% |
| 12-2028 | 628 | 10% |
| 12-2029 | 775 | 12% |
| 12-2030 | 832 | 13% |
| 12-2031 | 905 | 13% |
| 12-2032 | 951 | 13% |
| 12-2033 | 998 | 14% |
| 12-2034 | 1047 | 14% |
with a 5-year average of $451 million. Projected CapEx is expected to maintain at approximately 6% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 485 |
| 12-2026 | 429 |
| 12-2027 | 406 |
| 12-2028 | 386 |
| 12-2029 | 365 |
| 12-2030 | 375 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 13 |
| Days Inventory | 70 |
| Days Payables | 31 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 6M/2025 | 346 | 30 | 174 | (32) | 174 |
| 2026 | 835 | 111 | 354 | (24) | 393 |
| 2027 | 1015 | 163 | 365 | 7 | 480 |
| 2028 | 1198 | 215 | 375 | (3) | 610 |
| 2029 | 1373 | 266 | 383 | (9) | 734 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 124.30 | 21.3% |
| 10-Year DCF (Growth) | 161.17 | 57.3% |
| 5-Year DCF (EBITDA) | 141.54 | 38.2% |
| 10-Year DCF (EBITDA) | 172.12 | 68.0% |
Is West Fraser Timber Co Ltd (WFG.TO) a buy or a sell? West Fraser Timber Co Ltd is definitely a buy. Based on our DCF analysis, West Fraser Timber Co Ltd (WFG.TO) appears to be significantly undervalued with upside potential of 57.3%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $102.45.