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Why Is Louisiana-Pacific (LPX) Up 9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have added about 9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Louisiana-Pacific due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Louisiana-Pacific Corporation reported impressive results for third-quarter 2020, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. The upside was backed by strong SmartSide strand revenues, increase in OSB pricing and favorable resin costs. Operational efficiency and cost-containment efforts also supported its performance.
Detailed Discussion
Louisiana-Pacific reported third-quarter adjusted earnings of $1.56 per share, which beat the Zacks Consensus Estimate of $1.49 by 4.7%. The metric also increased significantly from the year-ago reported figure of 8 cents per share.
Net sales of $795 million topped the consensus estimate of $773 million by 2.9% and increased 31.8% from the year-ago period. The upside was driven by 22% SmartSide revenue growth and $179 million increase in Oriented Strand Board or OSB prices, partly offset by 5% lower sales volume. Notably, revenues for LP South America increased $9 million from the prior-year quarter due to 33% higher sales volume.
Segmental Analysis
Siding: The segment’s sales of $268 million were up 10% from the prior-year period. The upside was due to a 22% increase in SmartSide revenues owing to 19% higher volume and 3% increase in prices.
Adjusted EBITDA margin improved 1000% basis points (bps) from the prior-year quarter to 28%. The upside was backed by higher SmartSide revenues, increased production at the Dawson Creek facility and lower raw material costs, partially offset by a decrease in fiber sales.
OSB: Sales in the segment increased 87% year over year to $368 million. The company’s adjusted EBITDA margin also jumped significantly to 51% from negative 1% reported a year ago. Increased OSB prices and lower raw material costs for the quarter bode well.
Engineered Wood Products or EWP: Segment’s sales declined 2% year over year to $103 million. Adjusted EBITDA margin expanded to 9% from 5% a year ago.
South America: Sales of $45 million increased 25% and adjusted EBITDA margin of 24% expanded 400 bps from the year-ago quarter. Higher OSB and Siding volumes (local and export) were partially offset by increased imported resin costs and unfavorable foreign currency fluctuations.
Operating Highlights
Adjusted EBITDA of $273 million was up 457% from the prior-year figure of $49 million due to increased OSB prices and SmartSide sales.
Financials
As of Sep 30, 2020, Louisiana-Pacific had cash and cash equivalents of $420 million compared with $181 million at 2019-end. The company, which paid dividends of $49 million and $29 million for share repurchases, ended the quarter with nearly $1 billion of liquidity.
Long-term debt was $348 million, flat with 2019-end. For the third quarter, net cash provided by operations was $218 million, significantly up from $59 million reported in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 34.72% due to these changes.
VGM Scores
Currently, Louisiana-Pacific has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Louisiana-Pacific has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Louisiana-Pacific (LPX) Up 9% Since Last Earnings Report?
It has been about a month since the last earnings report for Louisiana-Pacific (LPX - Free Report) . Shares have added about 9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Louisiana-Pacific due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Louisiana-Pacific (LPX - Free Report) Q3 Earnings & Revenues Beat Estimates
Louisiana-Pacific Corporation reported impressive results for third-quarter 2020, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. The upside was backed by strong SmartSide strand revenues, increase in OSB pricing and favorable resin costs. Operational efficiency and cost-containment efforts also supported its performance.
Detailed Discussion
Louisiana-Pacific reported third-quarter adjusted earnings of $1.56 per share, which beat the Zacks Consensus Estimate of $1.49 by 4.7%. The metric also increased significantly from the year-ago reported figure of 8 cents per share.
Net sales of $795 million topped the consensus estimate of $773 million by 2.9% and increased 31.8% from the year-ago period. The upside was driven by 22% SmartSide revenue growth and $179 million increase in Oriented Strand Board or OSB prices, partly offset by 5% lower sales volume. Notably, revenues for LP South America increased $9 million from the prior-year quarter due to 33% higher sales volume.
Segmental Analysis
Siding: The segment’s sales of $268 million were up 10% from the prior-year period. The upside was due to a 22% increase in SmartSide revenues owing to 19% higher volume and 3% increase in prices.
Adjusted EBITDA margin improved 1000% basis points (bps) from the prior-year quarter to 28%. The upside was backed by higher SmartSide revenues, increased production at the Dawson Creek facility and lower raw material costs, partially offset by a decrease in fiber sales.
OSB: Sales in the segment increased 87% year over year to $368 million. The company’s adjusted EBITDA margin also jumped significantly to 51% from negative 1% reported a year ago. Increased OSB prices and lower raw material costs for the quarter bode well.
Engineered Wood Products or EWP: Segment’s sales declined 2% year over year to $103 million. Adjusted EBITDA margin expanded to 9% from 5% a year ago.
South America: Sales of $45 million increased 25% and adjusted EBITDA margin of 24% expanded 400 bps from the year-ago quarter. Higher OSB and Siding volumes (local and export) were partially offset by increased imported resin costs and unfavorable foreign currency fluctuations.
Operating Highlights
Adjusted EBITDA of $273 million was up 457% from the prior-year figure of $49 million due to increased OSB prices and SmartSide sales.
Financials
As of Sep 30, 2020, Louisiana-Pacific had cash and cash equivalents of $420 million compared with $181 million at 2019-end. The company, which paid dividends of $49 million and $29 million for share repurchases, ended the quarter with nearly $1 billion of liquidity.
Long-term debt was $348 million, flat with 2019-end. For the third quarter, net cash provided by operations was $218 million, significantly up from $59 million reported in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 34.72% due to these changes.
VGM Scores
Currently, Louisiana-Pacific has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Louisiana-Pacific has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.