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Housing Momentum to Aid Louisiana-Pacific (LPX) Q4 Earnings?

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Louisiana-Pacific Corporation (LPX - Free Report) is slated to report fourth-quarter 2020 results on Feb 16, before the market opens.

In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 4.7% and 2.9%, respectively. Also, third-quarter earnings of $1.56 per share increased significantly from the year-ago reported figure of 8 cents. Net sales of $795 million increased 31.8% from the year-ago period.

Louisiana-Pacific’s earnings topped the consensus mark in three of the last four quarters, with the average surprise being 26.7%.

Earnings & Revenue Expectations

The Zacks Consensus Estimate for Louisiana-Pacific’s fourth-quarter earnings is pegged at $1.84 per share, implying significant growth from 5 cents a year ago. The consensus estimate for revenues is $790 million, indicating 47.1% year-over-year growth.

Factors at Play

Louisiana-Pacific’s earnings and sales are expected to have increased in the fourth quarter. As the company’s performance is highly influenced by the housing market, solid momentum of the same is expected to benefit the upcoming results. Solid demand for new housing across the United States is likely to have helped Louisiana-Pacific to support the entire mix of businesses to some extent.

Overall, its business transformation and efficient cost-reduction strategy, along with recovery of the housing market are likely to benefit the to-be-reported quarter’s results.

However, it expects manufacturing or customer disruptions caused by the COVID-19 outbreak to materially impact fourth-quarter results to some extent. As announced during third-quarter earnings call, Louisiana-Pacific expects average OSB prices for the fourth quarter to be higher sequentially.

Meanwhile, the company expects revenue growth to be 20% year over year for SmartSide for the fourth quarter owing to the typical seasonal slowdown.

What the Zacks Model Says

Our proven model does not conclusively predict 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. But this is not the case here.

Earnings ESP: Louisiana-Pacific has an Earnings ESP of -0.54%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are some stocks in the construction sector that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases.

Owens Corning Inc (OC - Free Report) has an Earnings ESP of +3.24% and holds a Zacks Rank #2.

Primoris Services Corporation (PRIM - Free Report) has an Earnings ESP of +4.55% and carries a Zacks Rank #1.

Trex Company, Inc. (TREX - Free Report) has an Earnings ESP of +2.07% and carries a Zacks Rank #3.

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