On January 15, Zacks Investment Research upgraded the premier
supplier of building materials,
) to Zacks Rank #1 (Strong Buy), driven by a steadily
improving housing market, which is increasing the demand of
Why the Upgrade?
Louisiana-Pacific Corporation has been witnessing increasing
earnings estimates, reflecting expectations for significantly
higher year-over-year earnings growth rates in fiscal 2013 and
2014. The long-term expected earnings growth rate for this
stock is 5.0%.
The upward movements of the estimates are driven by solid
performance of the Oriental Strand Board (OSB) and Siding
segments in third quarter of 2012 and its recent Peace Valley
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On November 6, 2012, Louisiana-Pacific Corporation's third
quarter 2012 adjusted earnings per share (EPS) of 20 cents missed
the Zacks Consensus Estimate by 20%. Results, however, improved
significantly from the prior-year quarter loss of 19 cents, owing
to improved pricing in the OSB segment.
Though net sales in the quarter improved 33%, it lagged the Zacks
Consensus Estimate by 1.5%. Top line improvement was driven
by higher volumes at OSB and Siding segments and price increases
at the OSB segment.
Following the results of third quarter of 2012, Zacks Consensus
Estimate for fiscal 2012 increased 22.2% per share.
The upward movements of the estimates have also been encouraged
by the recent agreement with Canfor Corporation (CFP.TO) to
acquire the latter's 50% share in the Peace Valley Oriented
Strand Board (OSB) mill, which was until now owned by both the
Louisiana will thereby become the sole owner. The Peace Valley
acquisition will strengthen Louisiana's OSB segment, which
reported sales growth of 63% in the third quarter of 2012 owing
to an increase in housing activity. This acquisition strengthens
the company's position further to capitalize on the rising
With housing market recovery gaining momentum, there has been a
drop in inventory levels and an increase in home prices. As such,
most home building companies are gearing up to introduce a number
of new homes in order to meet the increase in demand, which
implies that demand for building materials has also improved.
Particularly, OSB segments and Siding segments are responding
well to the market impetus.
Other Stocks to Consider
Other companies with a favorable Zacks Rank and worth considering
) carrying a Zacks Rank #1 (Strong Buy), and
) carrying a Zacks Rank #2 (Buy).