| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 0/6 |
| Past Performance | 3/6 |
| Financial Health | 6/6 |
| Dividends | 2/6 |
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
| Historical stock prices | |
|---|---|
| Current Share Price | US$58.17 |
| 52 Week High | US$79.77 |
| 52 Week Low | US$49.98 |
| Beta | 1.65 |
| 1 Month Change | -4.94% |
| 3 Month Change | -8.97% |
| 1 Year Change | -0.46% |
| 3 Year Change | 165.25% |
| 5 Year Change | 144.31% |
| Change since IPO | 296.61% |
Recent News & Updates
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.
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
| LPX | US Forestry | US 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
| LPX volatility | |
|---|---|
| LPX Average Weekly Movement | 6.6% |
| Forestry Industry Average Movement | 7.5% |
| Market Average Movement | 7.6% |
| 10% most volatile stocks in US Market | 17.1% |
| 10% least volatile stocks in US Market | 3.1% |
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
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1972 | 4,800 | Brad Southern | https://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
| LPX fundamental statistics | |
|---|---|
| Market Cap | US$4.30b |
| Earnings (TTM) | US$1.34b |
| Revenue (TTM) | US$4.79b |
3.2x
P/E Ratio0.9x
P/S RatioIs LPX overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| LPX income statement (TTM) | |
|---|---|
| Revenue | US$4.79b |
| Cost of Revenue | US$2.73b |
| Gross Profit | US$2.06b |
| Other Expenses | US$716.00m |
| Earnings | US$1.34b |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 18.17 |
| Gross Margin | 42.98% |
| Net Profit Margin | 28.03% |
| Debt/Equity Ratio | 23.3% |
How did LPX perform over the long term?
See historical performance and comparisonDividends
1.5%
Current Dividend Yield5%
Payout RatioValuation
Is LPX undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
3/6Valuation 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.
| What is LPX's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$4.30b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 0.9x |
| Enterprise Value/EBITDA | 2.2x |
| 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 |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 25.8x | ||
AVNT Avient | 17.2x | 18.7% | US$4.4b |
SIM Grupo Simec. de | 8.5x | -9.1% | US$4.5b |
KWR Quaker Chemical | 42.4x | 36.4% | US$3.5b |
ATC Atotech | 36.6x | 25.6% | 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.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 3.2x |
| Fair PE Ratio | 4.5x |
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
0/6Future 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
3/6Past 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.
Discover strong past performing companies
Financial Health
How is Louisiana-Pacific's financial position?
Financial Health Score
6/6Financial 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
2/6Dividend 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
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/19 00:00 |
| End of Day Share Price | 2022/08/19 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/12/31 |
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.