Boise Cascade (BCC)

Building products company Boise Cascade Company (NYSE:BCC) reported Q3 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 2.7% year on year to $1.67 billion. Its GAAP profit of $0.58 per share was 16.3% below analysts’ consensus estimates.

Company Overview

Formed through the merger of two lumber companies, Boise Cascade Company (NYSE:BCC) manufactures and distributes wood products and other building materials.

Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Building materials distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is forcing investment in digital capabilities to communicate with and serve customers everywhere. Additionally, building materials distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.

Competitors in the building materials industry include Builders FirstSource (NASDAQ:BLDR), Owens Corning (NYSE:OC), and Beacon Roofing Supply (NASDAQ:BECN).

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Boise Cascade’s sales grew at a tepid 5% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Boise Cascade’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.3% annually.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Building Material Distribution and Wood products, which are 93.3% and 23.8% of revenue. Over the last two years, Boise Cascade’s Building Material Distribution revenue (plywood, siding, insulation) was flat while its Wood products revenue (lumber and beams) averaged 5.8% year-on-year declines.

This quarter, Boise Cascade’s revenue fell by 2.7% year on year to $1.67 billion but beat Wall Street’s estimates by 3.1%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection implies its newer products and services will fuel better top-line performance, it is still below average for the sector.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

Boise Cascade has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 20.3% gross margin over the last five years. Said differently, Boise Cascade had to pay a chunky $79.72 to its suppliers for every $100 in revenue.

Boise Cascade produced a 15.8% gross profit margin in Q3, marking a 3.9 percentage point decrease from 19.7% in the same quarter last year. Boise Cascade’s full-year margin has also been trending down over the past 12 months, decreasing by 2.9 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Boise Cascade has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.7%, higher than the broader industrials sector.

Looking at the trend in its profitability, Boise Cascade’s operating margin decreased by 7.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Boise Cascade generated an operating margin profit margin of 1.9%, down 4.9 percentage points year on year. Since Boise Cascade’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Boise Cascade’s unimpressive 4% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Boise Cascade’s two-year annual EPS declines of 36.7% were bad and lower than its two-year revenue losses.

Diving into the nuances of Boise Cascade’s earnings can give us a better understanding of its performance. Boise Cascade’s operating margin has declined over the last two years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Boise Cascade reported EPS of $0.58, down from $2.33 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Boise Cascade’s full-year EPS of $5.05 to shrink by 10.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Boise Cascade has shown mediocre cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 5.7%, subpar for an industrials business.

Taking a step back, we can see that Boise Cascade’s margin dropped by 6.8 percentage points during that time. This along with its unexciting margin put the company in a tough spot, and shareholders are likely hoping it can reverse course. If the trend continues, it could signal it’s in the middle of a big investment cycle.

Boise Cascade’s free cash flow clocked in at $63.25 million in Q3, equivalent to a 3.8% margin. The company’s cash profitability regressed as it was 2.8 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Boise Cascade hasn’t been the highest-quality company lately because of its poor bottom-line (EPS) performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 40.3%, splendid for an industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Boise Cascade’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Boise Cascade reported $511.8 million of cash and $512.4 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $413.6 million of EBITDA over the last 12 months, we view Boise Cascade’s 0.0× net-debt-to-EBITDA ratio as safe. We also see its $1.42 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing Boise Cascade beat analysts’ revenue expectations this quarter. We were also glad its Building Material Distribution revenue topped Wall Street’s estimates. On the other hand, its EPS missed and its Wood products revenue fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded up 2.3% to $69.91 immediately after reporting.

Updated: December 4, 2025 at 10:28 PM EST

When considering an investment in Boise Cascade, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Boise Cascade falls short of our quality standards. First off, its revenue growth was uninspiring over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its stellar ROIC suggests it has been a well-run company historically, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its projected EPS for the next year is lacking.

Boise Cascade’s P/E ratio based on the next 12 months is 21.3x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $90.33 on the company (compared to the current share price of $74.31).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.