Earnings estimates have been falling for Potlatch Corporation (PCH - Snapshot Report) after the company reported sluggish second quarter results on July 28. The drop in consensus estimates has been sharp enough to send the stock to a Zacks Rank #5 (Strong Sell).

While shares of Potlatch have fallen this year, it still doesn't look like a value here. Its Zacks Value Style Score is 'F'.

Potlatch Corporation is a real estate investment trust (REIT) that owns approximately 1.6 million acres of timberlands in Alabama, Arkansas, Idaho, Minnesota and Mississippi. Its business is organized into three segments:

• Wood Products (61% of total revenue year-to-date), which manufactures and markets lumber and plywood,
• Resource (34%), which include planting and harvesting trees and building and maintaining roads, along with generating revenues from activities such as hunting leases, recreation permits and leases, mineral rights leases, biomass production and carbon sequestration, and
• Real Estate (5%), which engages in real estate sales, subdivision and development activities

Second Quarter Results

Potlatch reported its second quarter results on July 28. Earnings per share came in at $0.02, which was ahead of the Zacks Consensus Estimate by 2 cents. However, it was a significant decline from $0.40 in the same quarter last year.

Revenues fell 11% year-over-year to $128.7 million, missing the consensus of $136.0 million. This was due to a decline in lumber prices. The Wood Products segment lost money in the quarter as the average lumber price realized declined 9% while lumber shipments fell slightly.

The company burned through nearly $8 million in operating cash flow in the quarter. It generated over $28 million in the same quarter last year.

Estimates Falling

Following Potlatch's Q2 miss, analysts revised their estimates significantly lower. This was sharp enough to send the stock to a Zacks Rank #5 (Strong Sell).

The 2015 Zacks Consensus Estimate is now $1.08, down from $1.17 before the report. The 2016 consensus is now $1.61, down from $1.83 over the same period.

As you can see, consensus estimates have been trending lower for several months now:

Lofty Valuation

While shares of Potlatch are down double-digits year-to-date, it still doesn't look like a value here. The stock trades at a lofty 25x 12-month forward earnings and sports an enterprise value to cash flow ratio of 23.

Its Zacks Value Style Score is 'F'.

The Bottom Line

With falling earnings estimates and premium valuation, Potlatch doesn't offer investors much to like right now.