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LPX

Louisiana-Pacific NYSE:LPX Stock Report

Last Price

US$58.17

Market Cap

US$4.3b

7D

-4.7%

1Y

-0.5%

Updated

19 Aug, 2022

Data

Company Financials +
LPX fundamental analysis
Snowflake Score
Valuation3/6
Future Growth0/6
Past Performance3/6
Financial Health6/6
Dividends2/6

LPX Stock Overview

Louisiana-Pacific Corporation, together with its subsidiaries, manufactures and markets building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets.

Louisiana-Pacific Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Louisiana-Pacific
Historical stock prices
Current Share PriceUS$58.17
52 Week HighUS$79.77
52 Week LowUS$49.98
Beta1.65
1 Month Change-4.94%
3 Month Change-8.97%
1 Year Change-0.46%
3 Year Change165.25%
5 Year Change144.31%
Change since IPO296.61%

Recent News & Updates

Aug 17

Louisiana-Pacific: Overvaluation Isn't Good, But Now It's Cheaper

When I last wrote about Louisiana-Pacific, I called the company overvalued. This was the right call in the short term. I say that because, in around 3 months, this company has dropped around 15.4% while the market has jumped around 3.16% (which is a jump by 2022 standards). Let's update the thesis on Louisiana-Pacific and see what we have here. Dear Readers, My last article on Louisiana-Pacific (LPX) was a continuation of the first article I wrote on the company - and the trend continues much in the same way. My stance, to "HOLD" or not to buy the company at this valuation, proved to be the right one, as we can see here. LPX Article (Seeking Alpha) Namely, the company is down quite a decent amount, and you'd have lost quite a bit of money investing at a too-expensive valuation. We always try to invest at what is a "cheap" price. Sometimes we manage to do just that. Sometimes we do not. In this case, I'm of the firm opinion that all signs were very clear insofar as where the company traded. Let's look at what exactly, if anything, has changed since my last piece. Revisiting Louisiana-Pacific In my first article, I called Louisiana-Pacific exactly what it is - a quality play on building materials. This is a sector I like. Over the years, I have owned significant portions of my portfolio in building materials investments. LPX is a business operating in very attractive, at least fundamentally, segments. Siding, focusing on the company's world-leading production of siding products. These are for outdoor buildings and feature a full line of siding, trim, fascia, and other products, which offer protection against various weather and pests, and are used in new home construction as well as the repair/reno markets. Oriented Strand Board ('OSB'), a sustainable and affordable product made from wood strands arranged in layers, with bonding of wax/resin. OSB serves much of the same uses as plywood but can be manufactured at a substantially lower cost. The company focuses on OSB structural panels and its VAP OSB segments, with products specifically engineered for various applications, such as subflooring, flame-resistant material, water barriers, and so forth. South America, is the company's SA segment, focusing on manufacturing and distribution of OSB, Siding, and wood products in South America and certain export markets. The company, when I began writing on it, also had an Engineered Wood Product segment, known as EWP, but this was sold on August 1st. As I also mentioned in the article, OSB is the far largest segment with near 45% of net sales revenue - siding is the second-largest with over 33%. This makes the remaining segments somewhat smaller in their scope. The company markets its products through traditional distribution in professional product dealers, home centers, and third-party buying groups as well as end-users such as homeowners. LPX has both DIY and professionals as their customers, which are very attractive customer segments. Insofar as those customers go, the company's top ten customers account for around 45% of sales. These include wholesale regional/state distribution companies that, distributors, and professional dealers specializing in sales directly to professionals and distribution firms, as well as Retail home centers you're very familiar with such as Home Depot (HD) or Lowe's (LOW). The company remains a market leader in key segments in which it operates. In fact, 2Q22 results, which were released only a week ago or so, saw the company improving results to a degree that gave me some surprise to see just how violently the company reacted in terms of the share price. Siding Solutions saw a 24% YoY sales increase, which is yet another quarterly sales record, breaking the previous one. Structural solutions also increased sales by 28%. The company bought back over 7.3M shares at a price of not far from half a billion dollars, taking advantage of what they viewed as a cheap valuation for their company, which the market for the time being seemed to disagree with. We start understanding the reaction when we dig down into the results. Despite impressive results in key segments, this could not make up for the price drops in OSB, which is what the company has been struggling with for some time (its OSB exposure). These trends saw the company's net sales drop 3% company-wide, but more importantly the FCF-proxy EBITDA drop by over 25% YoY. Even including the now-sold EWP segment, it still wasn't a good quarter in terms of EBITDA. This saw the company's EPS drop by nearly half a dollar per share, and we start to understand the negative trends dictating the company's share price. Reasons? LPX is very exposed to raw material inflation trends and logistical costs. Any sort of input cost increase here goes directly to the company's bottom line - and not just in OSB either. The company deserves a lot of credit for managing to keep Siding stable with the raw material and freight impacts seen in this quarter. LPX IR (LPX IR) OSB was far worse, with near-on $200M worth of overall structural solution and commodity impacts, and over $200M if we include raw material and input impacts, leading to the decline we're seeing here. There was roughly a $100M EBITDA benefit related to the company's ongoing strategic transformation and viewed a certain way, this offset the company's ongoing challenges fairly well. LPX IR (LPX IR) However, it's important to view these impacts as indicative of broader potential volatility that is definitely part of investing in LPX. The company considers it likely that the full-year CapEx will be around $430M on the high end, and calls for a 20% Siding solutions growth in the next quarter. Also, the company expects OSB - the company's most important segment, to keep falling. Not just fall, but a 40% YoY drop in 3Q22. LPX does not give us OSB full-year guidance but calls for Siding Solutions to grow around 20% for the full year. This is excellent, but it does not offset the loss of income from OSB. This is the key reason why the market is negative on this company here. The company did emphasize overall healthy demand, but LPX cannot provide shareholders with impressive growth when its Oriented Strand Board segment can't provide future growth. Remember, OSB is even more of sales now - 60% of 2Q22 as an example. Prices did stabilize somewhat (pricing is the crucial part here), but the company's segment - and product-specific forecasts are usually very solid - and when LPX forecasts a significant drop in OSB, you should listen. Louisiana-Pacific Valuation The issue remains the degree of earnings cyclicality here because LPX is one of the worst cyclical businesses I've ever reviewed. This wouldn't be as much of an issue if the company had dividend floor strategies and EU-like trends like say, Norsk Hydro (NHYDY), but it doesn't. Earnings trends for this company are truly somewhat jarring - take a look. Louisiana Pacific Earnings (F.A.S.T. Graphs) Now, the obvious hope is that the company's new structure and organization will result in a less spotty EPS trend. Forecasts seem to slowly suggest this, but I think it's far too early to call any sort of significant trend or pattern here. The company remains extremely volatile. However, to be clear, I don't mind trends like these, because you can't just look at EPS and expect it to give you the whole picture. However, from what I see, the company itself isn't all that forward-considering, at times, when considering its strategy or sales. Granted, visibility for this sector is at times extremely low, but an investor trying to make decent returns with safety here is often left at the mercy of very cyclical trends. Take the dividend, for instance. Until a few years back, the company didn't even have one. LPX didn't reintroduce the -08 canceled dividend until 2018. It also had several years of negative or very poor returns, and even after extremely good trends as we're currently seeing, the main questions become just how the company can manage the cash flows coming in, as well as how long we can expect this boom to continue for. While the company seems to be doing everything right - lowering the volatility and trying to provide more forward clarity, there are unfortunate things the company can't change. LPX remains extremely correlated to housing and reno. It should be evident to anyone that the current trend in housing and demand is situational and cyclical. It will not last, and the company should be using all of its energy not used on maintaining and expanding capacity to meet demands to try and soften some of the cyclical lows beyond what we've seen for the past 20 years. The situation is already in the midst of shifting. So, here's what I see for LPX. I see that trading at a rough 5-year average, the company still presents at a relative overvaluation because the 5-year RoR comes in at less than 8% annually when looking at a 12.31x 2024E P/E. It currently presents no more than a 1.5% dividend. This is after the recent set of drops.

Aug 05

Louisiana-Pacific declares $0.22 dividend

Louisiana-Pacific (NYSE:LPX) declares $0.22/share quarterly dividend, in line with previous. Forward yield 1.42% Payable Sept. 1; for shareholders of record Aug. 18; ex-div Aug. 17. See LPX Dividend Scorecard, Yield Chart, & Dividend Growth.

Shareholder Returns

LPXUS ForestryUS Market
7D-4.7%2.7%1.4%
1Y-0.5%10.7%-8.4%

Return vs Industry: LPX underperformed the US Forestry industry which returned 8.4% over the past year.

Return vs Market: LPX exceeded the US Market which returned -9% over the past year.

Price Volatility

Is LPX's price volatile compared to industry and market?
LPX volatility
LPX Average Weekly Movement6.6%
Forestry Industry Average Movement7.5%
Market Average Movement7.6%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.1%

Stable Share Price: LPX is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: LPX's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19724,800Brad Southernhttps://www.lpcorp.com

Louisiana-Pacific Corporation, together with its subsidiaries, manufactures and markets building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets. It operates through four segments: Siding; Oriented Strand Board (OSB); Engineered Wood Products (EWP); and South America. The Siding segment offers LP SmartSide trim and siding products, LP SmartSide ExpertFinish trim and siding products, LP BuilderSeries lap siding products, and LP Outdoor Building Solutions; and engineered wood siding, trim, soffit, and fascia products.

Louisiana-Pacific Fundamentals Summary

How do Louisiana-Pacific's earnings and revenue compare to its market cap?
LPX fundamental statistics
Market CapUS$4.30b
Earnings (TTM)US$1.34b
Revenue (TTM)US$4.79b

3.2x

P/E Ratio

0.9x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
LPX income statement (TTM)
RevenueUS$4.79b
Cost of RevenueUS$2.73b
Gross ProfitUS$2.06b
Other ExpensesUS$716.00m
EarningsUS$1.34b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)18.17
Gross Margin42.98%
Net Profit Margin28.03%
Debt/Equity Ratio23.3%

How did LPX perform over the long term?

See historical performance and comparison

Dividends

1.5%

Current Dividend Yield

5%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is LPX undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LPX?

Other financial metrics that can be useful for relative valuation.

LPX key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.9x
Enterprise Value/EBITDA2.2x
PEG Ratio-0.07x

Price to Earnings Ratio vs Peers

How does LPX's PE Ratio compare to its peers?

LPX PE Ratio vs Peers
The above table shows the PE ratio for LPX vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average25.8x
AVNT Avient
17.2x18.7%US$4.4b
SIM Grupo Simec. de
8.5x-9.1%US$4.5b
KWR Quaker Chemical
42.4x36.4%US$3.5b
ATC Atotech
36.6x25.6%US$4.4b
LPX Louisiana-Pacific
3.3x-47.0%US$4.5b

Price-To-Earnings vs Peers: LPX is good value based on its Price-To-Earnings Ratio (3.3x) compared to the peer average (26.2x).


Price to Earnings Ratio vs Industry

How does LPX's PE Ratio compare vs other companies in the Global Forestry Industry?

Price-To-Earnings vs Industry: LPX is good value based on its Price-To-Earnings Ratio (3.3x) compared to the US Forestry industry average (3.7x)


Price to Earnings Ratio vs Fair Ratio

What is LPX's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LPX PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio3.2x
Fair PE Ratio4.5x

Price-To-Earnings vs Fair Ratio: LPX is good value based on its Price-To-Earnings Ratio (3.3x) compared to the estimated Fair Price-To-Earnings Ratio (4.5x).


Share Price vs Fair Value

What is the Fair Price of LPX when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LPX ($60.72) is trading above our estimate of fair value ($16.54)

Significantly Below Fair Value: LPX is trading above our estimate of fair value.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Louisiana-Pacific forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-47.0%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LPX's earnings are forecast to decline over the next 3 years (-47% per year).

Earnings vs Market: LPX's earnings are forecast to decline over the next 3 years (-47% per year).

High Growth Earnings: LPX's earnings are forecast to decline over the next 3 years.

Revenue vs Market: LPX's revenue is expected to decline over the next 3 years (-15.4% per year).

High Growth Revenue: LPX's revenue is forecast to decline over the next 3 years (-15.4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if LPX's Return on Equity is forecast to be high in 3 years time


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Past Performance

How has Louisiana-Pacific performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


38.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LPX has high quality earnings.

Growing Profit Margin: LPX's current net profit margins (28%) are lower than last year (33.3%).


Past Earnings Growth Analysis

Earnings Trend: LPX's earnings have grown significantly by 38.7% per year over the past 5 years.

Accelerating Growth: LPX's earnings growth over the past year (8.5%) is below its 5-year average (38.7% per year).

Earnings vs Industry: LPX earnings growth over the past year (8.5%) underperformed the Forestry industry 29.8%.


Return on Equity

High ROE: LPX's Return on Equity (90%) is considered outstanding.


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Financial Health

How is Louisiana-Pacific's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: LPX's short term assets ($1.2B) exceed its short term liabilities ($464.0M).

Long Term Liabilities: LPX's short term assets ($1.2B) exceed its long term liabilities ($596.0M).


Debt to Equity History and Analysis

Debt Level: LPX has more cash than its total debt.

Reducing Debt: LPX's debt to equity ratio has reduced from 27.9% to 23.3% over the past 5 years.

Debt Coverage: LPX's debt is well covered by operating cash flow (468.2%).

Interest Coverage: LPX's interest payments on its debt are well covered by EBIT (222.6x coverage).


Balance Sheet


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Dividend

What is Louisiana-Pacific current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


1.51%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: LPX's dividend (1.45%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.48%).

High Dividend: LPX's dividend (1.45%) is low compared to the top 25% of dividend payers in the US market (3.99%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, LPX has been paying a dividend for less than 10 years.

Growing Dividend: LPX's dividend payments have increased, but the company has only paid a dividend for 5 years.


Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (5.2%), LPX's dividend payments are thoroughly covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (5.3%), LPX's dividend payments are thoroughly covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

3.5yrs

Average management tenure


CEO

Brad Southern (62 yo)

5.08yrs

Tenure

US$9,437,468

Compensation

Mr. William Bradley Southern, also known as Brad, has been Chief Executive Officer of Louisiana-pacific Corp. since July 1, 2017 and has been its Chairman since May 22, 2020. Mr. Southern serves as Directo...


CEO Compensation Analysis

Compensation vs Market: Brad's total compensation ($USD9.44M) is above average for companies of similar size in the US market ($USD6.64M).

Compensation vs Earnings: Brad's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: LPX's management team is considered experienced (3.5 years average tenure).


Board Members

Experienced Board: LPX's board of directors are considered experienced (5.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Louisiana-Pacific Corporation's employee growth, exchange listings and data sources


Key Information

  • Name: Louisiana-Pacific Corporation
  • Ticker: LPX
  • Exchange: NYSE
  • Founded: 1972
  • Industry: Forest Products
  • Sector: Materials
  • Implied Market Cap: US$4.297b
  • Shares outstanding: 73.87m
  • Website: https://www.lpcorp.com

Number of Employees


Location

  • Louisiana-Pacific Corporation
  • 414 Union Street
  • Suite 2000
  • Nashville
  • Tennessee
  • 37219
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/19 00:00
End of Day Share Price2022/08/19 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.