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Will Louisiana-Pacific (LPX) Beat Earnings?

Zacks Equity Research

Louisiana-Pacific Corp. (LPX) is set to report second quarter 2013 results on Aug 6. Last quarter, it posted in-line results. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Though the housing market continues to gain momentum, Louisiana-Pacific’s overall results have not been great due to persistent volatility in its Oriental Strand Board (:OSB) segment. The company’s financial performance is also susceptible to changes in prices of OSB, lumber, plywood and other wood products; the prices of which are falling recently.  

Louisiana-Pacific Corporation is engaged in the manufacture and distribution of oriental strand board, engineered wood products, siding, decking, molding and wall coverings.  As the prices of finished wood products have declined recently, it is expected to impact in the company’s top line in the upcoming quarter.

Earnings Whispers?

Our proven model does not conclusively show that Louisiana-Pacific is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings expected surprise prediction or ESP (Read:  Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP:  Louisiana-Pacific has an ESP of -3.23%.

Zacks Rank #3 (Hold): Louisiana-Pacific's Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes positive surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

We see likely earnings beat coming from these 3 companies in the construction sector:

  • Masco Corporation (MAS), Earnings ESP of +4.17% and a Zacks Rank #2 (Buy)
  • Ryland Group, Inc. (RYL), Earnings ESP of +1.03% and a Zacks Rank #2 (Buy)
  • PGT, Inc. (PGTI), Earnings ESP of +8.33% and a Zacks Rank #3 (Hold)

Read the Full Research Report on LPX

Read the Full Research Report on MAS

Read the Full Research Report on RYL

Read the Full Research Report on PGTI

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