Back to top

Image: Bigstock

Lower OSB Pricing to Hurt Louisiana-Pacific's (LPX) Q4 Earnings

Read MoreHide Full Article

Louisiana-Pacific Corporation LPX is slated to report fourth-quarter 2019 results on Feb 11, before the market opens.

In the last reported quarter, the company reported weaker-than-expected results. Earnings and revenues lagged the Zacks Consensus Estimate by 55.6% and 0.2%, respectively. Also, the metrics declined 90.4% and 18.2% from their respective year-ago reported figures. The downside was mainly due to lower oriented strand board (OSB) pricing across North American operations, and higher costs and expenses.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for Louisiana-Pacific’s fourth-quarter earnings is pegged at 10 cents per share, implying a decline of 47.4% on a year-over-year basis. The consensus estimate for revenues is $552 million, indicating 6.3% year-over-year fall.

Louisiana-Pacific Corporation Price and EPS Surprise

Factors at Play

Over the last few quarters, Louisiana-Pacific has been generating lackluster top- and bottom-line numbers due to lower OSB pricing across North American operations, softness across the business and a weak macro environment. Also, higher costs and expenses associated with different varieties of wood fiber and resins, as well as marketing investments have been denting its margins.

Pricing pressure and lower volume in the OSB segment are expected to negatively impact fourth-quarter 2019 results. Also, lower demand in the EWP segment owing to market weakness might have added to the woes.

Nonetheless, the company’s business transformation and efficient cost-reduction strategy, along with increased penetration of Siding products are likely to benefit the to-be-reported quarter’s results.

What the Zacks Model Says

Our proven model predicts an earnings beat for Louisiana-Pacific this time around. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Louisiana-Pacific has an Earnings ESP of +30.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

Here are some other stocks in the construction sector that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming releases.

Boise Cascade Company BCC has an Earnings ESP of +56.52% and a Zacks Rank #2.

North American Construction Group Ltd. (NOA - Free Report) has an Earnings ESP of +14.29% and a Zacks Rank #1.

Installed Building Products, Inc. IBP has an Earnings ESP of +3.09% and a Zacks Rank #1.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

North American Construction Group Ltd. (NOA) - free report >>