It has been about a month since the last earnings report for Louisiana-Pacific (LPX Quick QuoteLPX - Free Report) . Shares have added about 6.5% 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 Q3 Earnings Beat, Adjusted EBITDA Falls

Louisiana-Pacific Corporation or LP, reported mixed third-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate, but net sales missed the same. Both metrics declined on a year-over-year basis.

The company noted that Siding sales volume, price and net sales increased sequentially. Also, LP is witnessing normalized Siding inventories. LP's strategy positions it well for long-term growth as the housing outlook continues to improve.

Detailed Discussion

Louisiana-Pacific reported adjusted earnings of $1.62 per share, beating the Zacks Consensus Estimate of $1.39 by 16.6%. The bottom line declined 5.8% from the year-ago quarter’s reported figure of $1.72 per share.

Net sales of $728 million missed the consensus estimate of $736 million by 1.1% and declined 15% from the prior year, owing to lower segmental sales.

Single-family housing starts rose to 258 from the 242 units reported in the year-ago period. Multi-family starts were down to 104 units from 144 units reported a year ago.

Adjusted EBITDA of $190 million was down 5% from the prior-year quarter’s level.

Segmental Analysis

Siding: The segment’s sales of $345 million were down 13% from the prior-year period. A 3% rise in the average net selling price (“ASP”) was offset by a 16% decrease in volume from prior-year levels. The ASP benefited from list price increases. Volume reduced on challenging new and existing home selling markets as well as record results in the comparable year-ago period.

Adjusted EBITDA came in at $71 million, a 21% decline from $90 million reported a year ago. Lower volumes and press rebuild costs, partially offset by higher ASP and lower freight, raw materials and labor costs, hurt adjusted EBITDA.

OSB: Sales in the segment decreased 14% year over year to $335 million, owing to a decrease in sales volume from market curtailments and reduced production volume from the conversion of its Sagola, MI, mill to siding production. This was partially offset by an increase in OSB prices.

The company’s adjusted EBITDA grew 6% year over year to $120 million due to improved prices and lower mill-related costs, partially offset by lower sales volumes.

South America: Sales of $45 million declined 16% due to lower OSB volumes and ASP. Adjusted EBITDA plunged 54% from the year-ago quarter to $6 million due to lower sales volumes, reduced ASP and higher equipment relocation costs.

Financials

At September-end, LP had more than $710 million in liquidity. As of Jun 30, 2023, Louisiana-Pacific had cash and cash equivalents of $160 million compared with $369 million at 2022-end. Long-term debt was $347 million compared with the 2022-end level of $346 million.

For the third quarter, net cash provided by operations was $187 million, down from $195 million reported in the respective year-ago period.

At September-end, $200 million shares remained under the share repurchase program authorized in May 2022.

Guidance

For the fourth quarter, OSB revenues are expected to be sequentially lower by approximately 30% (based on Random Lengths’ report published on Oct 7, 2023). It anticipates a consolidated adjusted EBITDA of $60-$80 million.

For 2023, the company expects Siding Solutions’ revenues to decline by 10% from the year-ago period.

For the year, the company anticipates capital expenditures to range between $280 million and $295 million. The capital expenditure for mill conversions is likely to be $100-$105 million, $130-$135 million for sustaining maintenance and $50-$55 million for other strategic growth projects.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -49.33% due to these changes.

VGM Scores

Currently, Louisiana-Pacific has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. 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. Notably, Louisiana-Pacific has a Zacks Rank #3 (Hold). We expect an in-line 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 4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Weyerhaeuser reported revenues of $2.02 billion in the last reported quarter, representing a year-over-year change of -11.2%. EPS of $0.33 for the same period compares with $0.42 a year ago.

Weyerhaeuser is expected to post earnings of $0.17 per share for the current quarter, representing a year-over-year change of -29.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -28.1%.

Weyerhaeuser has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.