A month has gone by since the last earnings report for Louisiana-Pacific (LPX). Shares have added about 2.9% 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 catalysts.
Louisiana-Pacific Q2 Earnings & Sales Beat Estimates
Louisiana-Pacific posted second-quarter 2018 results, wherein earnings and revenues beat the Zacks Consensus Estimate.
The company reported adjusted earnings per share of $1.08 in the quarter, beating the consensus mark of 97 cents by 11.3%. Earnings improved considerably from the year-ago figure of 58 cents. The upside can be attributed to strong operational execution across the business, higher oriented strand board (OSB) pricing as well as ongoing growth in its value-added products. In fact, the reported quarter marked the company’s best second quarter since 2004. Each business — Siding, OSB, Engineered Wood and South America operations — reported higher earnings and revenues year over year.
Net sales of $810.8 million in the quarter surpassed the consensus mark of $788.6 million. Net sales increased 16.8% year over year. Adjusted EBITDA from continuing operations was $242 million in the quarter, up 44.9% from $167 million in the prior-year quarter.
OSB: Sales at the OSB segment increased 19.2% year over year to $387.4 million. In the second quarter, adjusted EBITDA increased 44.9% from the second quarter of 2017.
Siding Segment: This segment’s sales were up 13.2% to $261.6 million owing to higher volumes.
In the quarter under review, the Siding segment recorded adjusted EBITDA of $71 million, reflecting an increase of $14 million from the second quarter of 2017.
Engineered Wood Products (EWP): EWP sales grew 15.8% year over year to $109.1 million in the quarter, owing to higher volumes of LSL products.
Adjusted EBITDA increased $4 million from the prior-year quarter.
South America: This segment comprises facilities in Chile, Brazil, as well as sales offices in Peru and Argentina. The segment sales improved 17.1% year over year to $45.3 million.
Adjusted EBITDA was $12 million compared with $8 million in second-quarter 2017.
Other: Net sales were $7.4 million in the quarter compared with $7.1 million a year ago.
Louisiana-Pacific ended the quarter with cash and cash equivalents of $1,000.9 million as of Jun 30, 2018 compared with $928 million on Dec 31, 2017. Long-term debt (excluding current portion) was $348.4 million, down from $350.8 million at the end of 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, Louisiana-Pacific has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Louisiana-Pacific has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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