Louisiana-Pacific Corporation (LPX): Is It Now Or Never?

Louisiana-Pacific Corporation (NYSE:LPX) has been downgraded by BofA/Merrill on January 02 which now rates the stock as Neutral compared with Buy rating suggested in the past. Analysts at Seaport Global Securities, started covering the stock on October 23 with a Buy rating. The stock won favor of BofA/Merrill analysts who expressed their confidence in it using an upgrade from Neutral to Buy on July 16.

LPX stock dropped -0.24% in recent trade and currently has a stock-market value of $3.25B. The shares finished at $24.45, after trading as low as $24.26 earlier in the session. It hit an intraday high Thursday at $24.71. Trading activity significantly improved as the volume at ready counter increased to 2,521,434 shares versus 2,185,275 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 1,896,712 shares. The stock is now 19.91% above against its bear-market low of $20.39 on December 21, 2018. It has retreated -31.53% since it’s 52-week high of $32.16 reached in September. Now the market price is down -14.39% on the year and up 10.04% YTD.

Wall Street’s most bullish Louisiana-Pacific Corporation (NYSE:LPX) analysts are predicting the share price to blow past $36 per share during the next 12 months. The current median share price forecast by them is $31, suggesting that the stock could increase 26.79% in that time frame. The average price target of $31.33 calls for a nearly 28.14% increase in the stock price.

Louisiana-Pacific Corporation (LPX)’s 50 day simple moving average (SMA 50) price is $24.45 and its 200-day simple moving average (SMA 200) price is $25.65. The company’s stock currently has a total float of 128.71M shares. Its weekly volatility is hovering around 2.86% and felt 2.59% volatility in price over a month. On the upside, the share price will test short term resistance at around $24.69. On a downside, the stock is likely to find some support, which begins at $24.24. The failure to get near-term support could push it to $24.02.

When looking at valuations, Louisiana-Pacific Corporation (LPX) has a cheap P/E of 8.91x as compared to industry average of 31.13x. Moreover, it trades for 10.13 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 2.02x price/book and 1.15x price/sales. Compared to others, Louisiana-Pacific Corporation is in a different league with regards to profitability, having net margins of 14%. To put some perspective around this, the industry’s average net margin is 4.99%. LPX’s ROE is 22.7%, which is also considerably better than the industry’s ROE of 3.36%. It’s also very liquid in the near term, with a current ratio of 4.9. The stock has a debt/capital of 0.21.

Shares of LPX have gained 1% since the company’s most recent earnings report. Over the past 12 fiscal quarters, Louisiana-Pacific Corporation (NYSE:LPX) has topped consensus earnings estimates in 7 quarters (58%), missed earnings in 5 quarters (41%), whereas at 0 occasion EPS met analyst expectations. LPX last reported earnings that receded expectations. The company raked in $0.19 per share, -99.29% change on the same period last year. That was worse than consensus for $0.26. Revenue for the recent quarter stood at $589.1 million, down -17% on last year and below the $616.51 million predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $585.2 million to $655 million, which should be compared with $674 million generated last year. EPS is seen in a range of $0.05 to $0.34, against the $0.43 reported a year ago.