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Louisiana-Pacific (LPX) Up 7.3% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Louisiana-Pacific Corporation (LPX - Free Report) . Shares have added about 7.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is LPX 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 catalysts.

First Quarter 2018 Results

Louisiana-Pacific posted first quarter of 2018 results wherein earnings and revenues fell short of the Zacks Consensus Estimate.

The company reported adjusted earnings per share of 63 cents in the quarter, missing the consensus mark of 71 cents by 11.3%. Earnings improved considerably by 65.8% from the year-ago quarter’s figure of 38 cents. The upside can be attributed to higher oriented strand board (OSB) prices and the strong performances in engineered wood products and South American operations. However, the recent rail transportation system issues in Canada, caused by unplanned downtime at its operations, increased inventory and late shipments.

Net sales of $691.3 million in the quarter failed to beat the consensus mark of $698 million by 0.9%. Net sales increased 13% year over year.

Adjusted EBITDA from continuing operations was $159 million in the quarter, up 39.5% from $114 million in the prior-year quarter.

Segmental Analysis

OSB: Sales in the OSB segment increased 16.8% year over year to $313 million. In the first quarter, adjusted EBITDA increased 48.7% from the first quarter of 2017.

Beginning this quarter, the company will report OSB commodity sales and value-add sales separately. Sales volumes of commodity OSB products were 2% higher, while the same for its value-added products were 2% lower on a year-over-year basis. Meanwhile, pricing for OSB was 18% higher for commodity products and 15% for value-added products.

Siding Segment: Sales in the segment were up 6.1% to $227 million owing to 6% increase in SmartSide average sales prices. However, volumes were lower by 4%.

In the quarter under review, the Siding segment recorded adjusted EBITDA of $54 million, up by $5 million from the first quarter of 2017.

Engineered Wood Products (EWP): EWP sales grew 23.2% year over year to $101 million in the quarter, owing to higher volumes of I-Joist (up 19%) and LVL products (4%).

Pricing increased 9% for LVL, 10% for LSL and 7% for I-Joists. Adjusted EBITDA increased $2 million from the prior-year quarter.

South America: This segment comprises facilities in Chile and Brazil. Segmental sales improved $5 million year over year to $42 million.

Adjusted EBITDA was $11 million compared with $7 million in first-quarter 2017.

Other: Net sales were $7.9 million in the quarter compared with $8.7 million in the prior-year quarter.

Financials

Louisiana-Pacific ended the quarter with cash and cash equivalents of $895.7 million as of Mar 31, 2018 compared with $928 million as of Dec 31, 2017.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

VGM Scores

At this time, LPX has an average Growth Score of C. Its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the top 40% 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.

Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.

Outlook

LPX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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