Louisiana-Pacific Forecasts Decline in EPS Amidst Market Gains

Investors are bracing for Louisiana-Pacific's upcoming earnings report, predicting a significant drop in EPS by 46.3% year-over-year, alongside a slight decline in revenue. Despite recent stock gains, the company holds a Zacks Rank of 4 (Sell), raising concern regarding its near-term performance.

Date: 09-10-2024

AI Rating: 4

The report highlights Louisiana-Pacific (LPX) as closing at $106.95, reflecting a decline of -1.16%, trailing major indices like the S&P 500. The home construction supplier has shown a strong 16.03% increase over the past month, surpassing sector and index growth. Despite this recent performance, there are significant concerns regarding the upcoming earnings report.

Key metrics of concern include an anticipated Earnings Per Share (EPS) of $0.87, which represents a steep decrease of 46.3% compared to the same quarter last year. This notable decline in earnings signals potential weakness in the company’s financial performance. Additionally, the revenue forecast of $722.05 million, reflecting a 0.82% year-over-year decline, suggests struggles in maintaining prior levels of sales.

However, there are positive projections for the full year, with a Zacks Consensus estimate forecasting a total earnings of $5.04 per share, representing a significant annual growth of 56.52%. Revenue for the full year is also expected to rise by 13.62%, possibly indicating recovery if these estimates hold true.

The report mentions a recent downgrade in analyst estimates which has resulted in the Zacks Rank being assigned a 4 (Sell). This rating, coupled with an expectation of lower EPS estimates, reflects diminishing confidence among analysts, which typically correlates with share price movement.

In terms of valuation, LPX has a Forward P/E ratio of 21.47, indicating some degree of discount compared to the industry average of 26.64. However, a high PEG ratio of 5.03 compared to the industry average of 3.61 implies that the stock may be overvalued based on expected earnings growth.

Overall, while LPX has shown impressive short-term stock performance, the significant expected decline in EPS and revenue raise red flags for investors. The weak Zacks Rank suggests caution as the overall market responds to these impending results.

Stocks: LPX