It has been about a month since the last earnings report for Louisiana-Pacific (LPX Quick QuoteLPX - Free Report) . Shares have added about 21.3% 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 the most recent earnings report in order to get a better handle on the important drivers.

Louisiana-Pacific Q3 Earnings & Sales Beat

Louisiana-Pacific Corporation’s or LP reported better than expected results for third-quarter 2022, wherein both the top and the bottom line surpassed their respective Zacks Consensus Estimate. However, these metrics declined year over year due to lower OSB prices.

LP chairman and CEO Brad Southern, stated, "New residential construction appears to be slowing, and OSB prices have stabilized at a more historically normal level. However, demand for SmartSide siding remains strong, especially in repair & remodeling applications. LP is investing in long-term growth, including expanding the Houlton, Maine siding facility and plans to add new ExpertFinish capacity in Washington."

Detailed Discussion

Louisiana-Pacific reported adjusted earnings of $1.72 per share, beating the Zacks Consensus Estimate of $1.62 by 6.2%. The bottom line declined 51.1% from the year-ago quarter’s reported figure of $3.52 per share.

Net sales of $852 million marginally topped the consensus estimate of $848 billion by 0.5% but declined 16% from the year-ago period.

Single-family housing starts fell 18.2% year over year, but multi-family starts rose 18.7%.

Segmental Analysis

Siding: The segment’s sales of $394 million were up 26% from the prior-year period. A 27% increase in Siding Solutions (formerly known as SmartSide) revenues, backed by a 16% rise in average net selling price and a 9% increased volume from the prior-year levels. The average net selling price benefited from list price increases and an improved mix of innovative products. Volume increased on the back of the ongoing ramp-up of the Houlton facility and increasing operational efficiency at other Siding facilities.

Adjusted EBITDA grew 24% to $90 million. Price and volume growth was offset by raw material, freight and labor inflation and facility maintenance costs.

OSB: Sales in the segment decreased 35% year over year to $388 million, owing to 39% lower OSB prices. Volume increased 5% year over year. The company’s adjusted EBITDA fell 70% year over year to $113 million due to lower prices, increased raw material and wage inflation and facility maintenance costs partially offset by higher sales volume and the incremental margin generated by Structural Solutions products.

South America: Sales of $53 million declined 30%. Adjusted EBITDA fell 62% from the year-ago quarter to $14 million due to lower OSB sales volume, higher raw material costs and unfavorable currency.

Operating Highlights

The gross margin contracted to 27.2% from 49.6% reported a year ago. Adjusted EBITDA of $200 million was down from the prior-year quarter’s figure of $480 million.

Financials

As of Sep 30, 2022, Louisiana-Pacific had cash and cash equivalents of $469 million compared with $358 million at the 2021-end. Long-term debt was in line with the 2021-level of $346 million.

For the third quarter, net cash provided by operations was $195 million, down from $511 million reported in the year-ago period.

Guidance

For Fourth-quarter 2022, the company expects Siding Solutions’ revenue growth to be more than 30% from the year-ago period. OSB revenues are expected to be sequentially low by 30% (based on Random Lengths’ report published on Oct 28, 2022). It anticipates a consolidated adjusted EBITDA of $100 million.

For 2022, Louisiana-Pacific continues to expect Siding Solutions revenue growth of nearly 24%. Also, the company projects capital expenditures for 2022 to be $400-$420 million, indicating an increase from $254 million in 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -38.64% due to these changes.

VGM Scores

At this time, Louisiana-Pacific has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Louisiana-Pacific has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Louisiana-Pacific belongs to the Zacks Building Products - Wood industry. Another stock from the same industry, Weyerhaeuser (WY Quick QuoteWY - Free Report) , has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Weyerhaeuser reported revenues of $2.28 billion in the last reported quarter, representing a year-over-year change of -2.9%. EPS of $0.42 for the same period compares with $0.60 a year ago.

Weyerhaeuser is expected to post earnings of $0.20 per share for the current quarter, representing a year-over-year change of -59.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -18.3%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Weyerhaeuser. Also, the stock has a VGM Score of B.