Louisiana-Pacific Corporation LPX is scheduled to report fourth-quarter 2024 results on Feb. 19, before market open.

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In the last reported quarter, the company’s earnings and net sales beat the Zacks Consensus Estimate by 38.6% and 3.2%, respectively. However, both metrics declined 20.7% and 0.8%, respectively, on a year-over-year basis.

The company’s earnings surpassed the consensus mark in each of the trailing four quarters, with an average of 30.7%.

Trend in LPX’s Estimate Revision

The Zacks Consensus Estimate for Louisiana-Pacific’s fourth-quarter earnings per share (EPS) is pegged at 79 cents, which increased 5 cents in the past 30 days. This indicates an increase of 11.3% from 71 cents reported a year ago.

The consensus estimate for net sales is pegged at $664.4 million, indicating an increase of 1% from $658 million in the year-ago quarter.

Factors to Shape Up LPX’s Q4 Results

Revenues

Louisiana-Pacific’s fourth-quarter top line is expected to have increased year over year, driven by strength in the Siding business. Increased penetration of Siding products in repair/remodel and the rollout of SmartSide products are likely to have supported growth. The Siding unit, which accounted for 54.4% of sales in the third quarter, has been witnessing solid demand despite macroeconomic challenges and a slow housing market. Siding is less sensitive to housing market cyclicality as more than 50% of Siding Solutions demand comes from other markets like sheds, and repair and remodeling.

Although R&R spending remained slightly lower in the last quarter compared with the prior year, the outlook has improved. Growth in new construction and repair/remodel is expected to have contributed to Louisiana-Pacific’s top line.

The ongoing growth and margin expansion in Siding is expected to have offset the timing issue. LPX expects Siding Solutions’ revenues to have grown 9-10% year over year, reaching approximately $365 million. Also, continued strength in the Siding order file is likely to have supported growth in the fourth quarter. The consensus estimate for the Siding segment’s net sales is pegged at $370 million, indicating an improvement from the year-ago reported figure of $332 million.

However, the challenging price environment in the Oriented Strand Board (“OSB”) segment (accounted for 32.8% of sales), along with lumber market swings, is likely to have impacted the company’s top line. The company expects typical seasonal downtime to have impacted OSB volumes in the fourth quarter.

The consensus estimate for the OSB segment’s net sales is pegged at $249 million, implying a decline from $272 million in the prior year. The consensus mark for the South America segment’s net sales is pegged at $58 million, indicating an increase from $52 million in the prior year.

Margins

The bottom line of Louisiana-Pacific is likely to have been improved year over year on the back of solid execution of its strategy to drive growth, margin, specialization and efficiency. However, high operational costs due to incremental investments in sales and marketing are expected to have kept the company’s margins under pressure in the to-be-reported quarter.

LPX anticipates a consolidated adjusted EBITDA of $85-$105 million, down from $129 million reported a year ago. Of this, $70-$80 million is likely to be contributed by Siding. Assuming prices stay flat at current levels, the company expects OSB EBITDA in the fourth quarter to be between $15 million and $25 million.

The consensus mark for adjusted EBITDA for the Siding segment is pegged at $85 million, up from $72 million reported in the year-ago quarter. Meanwhile, the same for OSB is pegged at $41 million, down from $59 million in the prior-year quarter.

What the Zacks Model Unveils for LEG

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. This is exactly the case here.

Earnings ESP of LEG: Louisiana-Pacific has an Earnings ESP of +21.14% at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

LEG’s Zacks Rank: Louisiana-Pacific currently carries a Zacks Rank #3.

Other Stocks With Favorable Combination

Here are some other companies in the Zacks Construction sector, which, too, according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported.

Frontdoor, Inc. FTDR currently has an Earnings ESP of +60.00% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

FTDR’s earnings for the fourth quarter of 2024 are expected to decline 45%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 269%.

Trex Company, Inc. TREX has an Earnings ESP of +20.00% and a Zacks Rank of 2.

TREX reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 9%. The company’s earnings for the fourth quarter of 2024 are expected to decrease 75%.

TopBuild Corp. BLD currently has an Earnings ESP of +1.28% and a Zacks Rank of 3.

BLD’s earnings for the fourth quarter of 2024 are expected to increase 8.3%. The company reported better-than-expected earnings in the trailing three out of four quarters and missed once, the average surprise being 1%.

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Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report

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