OSB Prices to Hurt Louisiana-Pacifics' (LPX) Q4 Earnings
Louisiana-Pacific Corporation LPX is slated to report fourth-quarter 2021 results on Feb 22, before the market opens.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 15.9% and 18.5%, respectively. Its earnings and revenues rose significantly from the year-ago reported figures.
It is to be noted that earnings surpassed the consensus mark in each of the trailing seven quarters.
Trend in Estimates
The Zacks Consensus Estimate for Louisiana-Pacific’s fourth-quarter earnings is pegged at $1.86 per share, implying a decline of 7.5% on a year-over-year basis. The consensus estimate for revenues is $846 million, indicating a 1.6% year-over-year fall.
LouisianaPacific Corporation Price and EPS Surprise
LouisianaPacific Corporation price-eps-surprise | LouisianaPacific Corporation Quote
Factors to Note
Louisiana-Pacific’s fourth-quarter 2021 earnings and sales are expected to have witnessed a year-over-year fall due to a significant correction in OSB prices and the ongoing supply chain headwinds, especially on raw material, labor and transportation.
During the third-quarter 2021 earnings call, the company projected OSB revenues for the fourth quarter to be 30% lower sequentially due to average OSB prices. LPX projects consolidated adjusted EBITDA for the fourth quarter to be more than $200 million. In fourth-quarter 2020, adjusted EBITDA totaled $328 million.
That said, Louisiana-Pacific expects Siding Solutions revenue growth to be 5% from the year-ago period. The company’s gradual transformation from a commodity producer to a more stable cash-generative business, increased focus on the Siding business and rigorous cost-control efforts bode well. Also, robust housing demand and a rebound in repair and remodel activities are likely to have benefited LPX.
Its strategic business transformation, effective cash management and inorganic moves are likely to benefit the to-be-reported quarter’s results.
The consensus estimate for the Siding segment’s net sales is pegged at $269 million, indicating an improvement of 3.9% from the year-ago reported figure of $259 million. The same for OSB units is pegged at $409 million, suggesting a decline of 4.4% from $91 million in the prior year. The consensus estimate for the EWP business’ net sales is $120 million, which suggests a rise of 11.1% from $108 million a year ago. The same for South America segment’s net sales is pegged at $56 million, suggesting an improvement of 12% from $50 million in the prior year.
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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The company has an Earnings ESP of +1.08%.
Zacks Rank: It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Another Stock Worth a Look
Boise Cascade Company BCC has an Earnings ESP of +1.08% and a Zacks Rank #1.
In the trailing four quarters, Boise Cascade’s earnings topped the consensus mark in each of the trailing four quarters, with the average being 45.5%. According to our model, BCC has the right combination of elements to post an earnings beat for the quarter to be reported.
Peer Releases
UFP Industries, Inc. UFPI reported stellar results for fourth-quarter 2021. Both earnings and net sales beat the Zacks Consensus Estimate as well as improved impressively on a year-over-year basis.
With this, UFP Industries’ earnings and sales surpassed the consensus mark in the trailing four quarters. The uptrend was mainly driven by the diversity of markets and an improved pricing model.
Weyerhaeuser Company WY reported fourth-quarter 2021 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate and increased year over year despite persistent supply-chain challenges and the ongoing pandemic.
Weyerhaeuser remains encouraged by strong demand fundamentals that will drive the growth of businesses. WY also remains focused on creating superior value for shareholders through its unmatched portfolio of assets, industry-leading operating performance, strong ESG foundation and disciplined capital allocation.
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