BOISE CASCADE Co (BCC) stock intrinsic value fair value estimate & owner earnings analysis

Boise Cascade is two businesses that work together. Its building materials distribution business is one of the largest wholesale distributors of building materials in the United States. It sells commodity panels and lumber, what it calls general-line products (siding, decking, doors and millwork, roofing and insulation) and engineered wood. Its customers are dealers, home centers and specialty distributors. That business had $5.94 billion of sales in 2025. The Wood Products business makes laminated veneer lumber, I-joists and beams (together called engineered wood) and plywood. The distribution business buys about 75% of what the mills produce. The share of the mills' plywood sold through the company's own branches rose from 28% in 2021 to 51% in 2025. Demand depends on U.S. home building, especially single-family homes, and on repair and remodeling work. Profits rise and fall sharply with the housing market and wood prices. How we measured earnings. We start with cash from operations and remove the swings from working capital. We then subtract stock pay as a real cost and subtract the spending needed to keep the plants and branches running. Pension contributions count as a cost. Non-cash charges are added back. These include the 2018 pension settlement, losses on facility sales, and about $20 million a year of amortization on customer relationships bought with distribution acquisitions. We treat those relationships as kept up by a sales force whose cost is already charged, and we keep later-year growth modest for that reason. On this basis owner earnings per share were $2.77 in 2017, $3.26 in 2018, $2.30 in 2019, $6.38 in 2020, $18.33 in 2021, $22.95 in 2022, $10.11 in 2023, $7.47 in 2024 and $2.15 in 2025. Our rule counts capital spending as upkeep unless revenue is growing. Revenue fell every year from 2023 to 2025, so all of the $215 to $241 million spent in each of those years is charged as upkeep. That is true even though the spending included a new distribution center in Hondo, Texas (finished August 2025), the purchase of previously leased centers in Chicago and Minneapolis, and multi-year upgrades at the Thorsby, Alabama engineered-wood mill and the Oakdale, Louisiana plywood mill. This makes the recent record conservative. Normal earning power. We use the median of 2017 through 2025. 2017 is the first full year after the March 2016 purchase of Georgia-Pacific's engineered-wood mills in Thorsby, Alabama and Roxboro, North Carolina. The window covers a full cycle: the soft 2018-2019 market, the 2021-2022 price boom and the 2025 slump. The median is $6.38 per share, about $252 million a year. Since then the company has bought back stock: $183 million in 2025 and $110 million in the first half of 2026. That brought diluted shares down to about 35.6 million, so the same earning power is about $7.07 per share today. We give no credit for the $305 million of cash on hand at mid-2026. We also do not subtract the roughly $450 million of debt, because owner earnings are already after interest. Where things stand. 2025 was a weak year. Wood Products earned only $5.8 million as engineered-wood and plywood prices and volumes fell and the Oakdale mill was shut for modernization. U.S. single-family housing starts fell 7%. Owner earnings per share fell 71%. First-half 2026 net income was $75.2 million, down from $102.3 million a year earlier, although second-quarter sales rose 5%. The clear change is capital spending. The company expects $150 to $170 million for 2026, and first-half spending was $63.3 million against $132.3 million a year earlier. That alone lifted first-half owner earnings to $95.8 million from $39.0 million. For that reason alone, which two quarters already show, the base case's first year is $3.85 a share, up about 79% from 2025. We are not assuming better prices. Base case, $119.61 a share. Owner earnings are $3.85 in the first year and return to the $7.07 mid-cycle level by year four, as the company's own record shows earnings recovering from the 2019 low in 2020. After that they grow 1.5% a year, supported by expansion in distribution. General-line sales rose from $2.44 billion in 2023 to $2.69 billion in 2025 while commodity sales fell. The December 2025 purchase of Holden Humphrey in Chicopee, Massachusetts adds siding, decking and trim. After year ten, earnings are held flat rather than grown. What keeps them coming is the nationwide distribution network and the mills, kept up by spending that has already been subtracted. Bear case, $64.80 a share. The weak conditions of 2025 continue. Owner earnings are $3.30 a share for three years and then $4.00 a year from then on. That $4.00 is roughly 2025's operating result with normal capital spending, minus the loss of one of the two customers that each bought 11% to 12% of 2025 sales. Debt adds little risk: the $400 million of 4.875% notes do not come due until July 2030, and cash covered most of the debt at mid-2026. Bull case, $161.47 a share. Capital spending stays at the guided level, the mill upgrades lower production costs, and more plywood moves through the company's own branches. Mid-cycle earnings reach $9.00 a share, still below what 2024 would have produced with normal capital spending. They then grow 3% a year through year ten and stay flat after that. What would make this wrong: engineered-wood pricing staying at 2025 levels for many years, the loss of a major customer, or capital spending climbing back above $200 million a year without matching growth. Margin-of-safety price: $68.00 a share, about 43% below the base case and just above the bear case. Earnings are very cyclical (owner earnings per share fell 90% from 2022 to 2025), but the balance sheet carries little net debt.