Please ensure Javascript is enabled for purposes of website accessibility

Why Louisiana-Pacific Stock Jumped This Week

By Lou Whiteman – Nov 4, 2021 at 3:42PM

Key Points

  • Louisiana-Pacific reported strong growth in all segments, benefitting from strong demand for construction products.
  • The company expects to generate a 25% EBITDA margin for the full year.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company delivered a strong quarter despite headwinds from shipping and raw materials.

What happened

Building products manufacturer Louisiana-Pacific (LPX 0.54%) generated strong results thanks to the booming housing market, and investors are excited. The shares traded up 13% for the week, as of midday Thursday, following Louisiana-Pacific's strong earnings report.

So what

On Nov. 2, Louisiana-Pacific reported third-quarter adjusted earnings of $3.87 per share on revenue of $1.22 billion, topping consensus estimates for $3.42 per share in earnings on revenue of $1.1 billion. Net sales were up 53% year over year, led by a near doubling in revenue from its engineered wood products division, 63% growth in oriented strand board (OSB) sales, and 19% growth in siding.

Workers install interior wallboards at a construction site.

Image source: Getty Images.

There are some issues the company is facing. For example, OSB saw strong pricing but also higher costs from raw materials, logistics, and mill maintenance. But Louisiana-Pacific was still able to generate strong results.

"As expected, the third quarter saw a significant correction in OSB prices and ongoing headwinds from raw material prices and availability," CEO Brad Southern said in a statement.

Now what

Louisiana-Pacific reiterated its guidance to expect 10% year-over-year revenue growth from siding across the second half and a 25% full-year margin in earnings before interest, taxes, depreciation, and amortization.

The company is facing some of the same challenges as other manufacturers when it comes to supply chain disruptions and raw materials costs, but in a red-hot housing market, end demand for its products is holding up strong.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.