Louisiana-Pacific Hits 52 Week High on Solid Q1 Results - Analyst Blog
Share price of Louisiana-Pacific Corporation LPX reached a new 52-week high of $17.98 on May 18. Shares of the company eventually closed at $17.96, yielding a solid year-to-date return of 8.6%. In fact, share price of this premier supplier of building materials has been on the upside since the company announced better-than-expected first quarter 2015 results on May 5 and has gained 4.5%.
Louisiana-Pacific‘s first quarter 2015 earnings and revenues exceeded market expectation on the back of strong performance of the Siding business and improved operating performance. Meanwhile, net sales also increased 6% year over year on the back of solid sales in the Siding segment.
The Siding segment reported a 21% increase in net sales, as it benefited from improved product mix and increased sales volume. The Siding segment reported increased sales across all of its business including housing, retail, repair and remodel and non-residential. The segment’s continued penetration in retail, repair and remodel markets and sheds drove volumes and prices of its SmartSide category. The segment also benefitted from lower resin cost.
Another segment that drove Louisiana-Pacific‘s results in the first quarter of 2015 was Engineered Wood Products. Net sales of Engineered Wood Products increased 4% on the back of double-digit volumes increase for both Laminated Veneer Lumber and Laminated Strand Lumber, as the company focused more on export and industrial markets. Moreover Selling and administrative expenses decreased 4.9% year over year in the first quarter of 2015, due to solid cost control.
The company is positive about improving momentum of the housing construction market in the upcoming quarters and expects higher demand for its products. The company expects its Swan Valley mill to start SmartSide production in the fourth quarter of 2015 and cater to increasing demand.
Louisiana-Pacific carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better-ranked stocks in the building/construction sector include Universal Forest Products Inc. UFPI, Headwaters Incorporated HW and Owens Corning OC. While Headwaters sports a Zacks Rank #1 (Strong Buy), Universal Forest Products and Owens Corning carry a Zacks Rank #2 (Buy).
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