Louisiana-Pacific (LPX) and Lennar Forge Nationwide Partnership
Louisiana-Pacific Corporation LPX — commonly known as LP Building Solutions (LP) — and Lennar Corporation LEN have teamed up to revolutionize the homebuilding industry. The nationwide supply agreement between LP, a leading manufacturer of high-performance building products, and Lennar, one of the nation’s premier homebuilders, marks a significant milestone in their existing collaboration. This partnership combines LP’s expertise in engineered wood with Lennar’s extensive market reach, promising to reshape the landscape of home construction.
Lennar will expand the use of LP’s top-notch engineered wood building products, including LP SmartSide Trim & Siding, LP Structural Solutions sheathing, sub-flooring, and oriented strand board (OSB). These products are renowned for their durability and performance, perfectly complementing Lennar’s commitment to delivering quality homes to its customers.
The collaboration enables Lennar to maintain its reputation for making homeownership accessible without compromising on quality. By integrating LP’s innovative building materials into its projects, Lennar can construct high-quality homes that cater to the diverse needs of homeowners across the nation.
For LP Building Solutions, the expanded partnership with Lennar signifies a shared dedication to excellence in home construction. This collaboration not only broadens the market reach of LP SmartSide and LP Structural Solutions products but also enhances the accessibility of high-performance, carbon-negative solutions for homebuyers nationwide.
Together, LP and Lennar are poised to set new standards in the homebuilding industry, offering unmatched quality and innovation to homeowners across the country. This partnership represents a strategic alignment of values and expertise, promising a brighter future for both companies and the customers they serve.
Strategic Initiatives Bode Well
Louisiana-Pacific’s business banks on acquisitions, business combinations and divestitures of low-profitable businesses. Louisiana-Pacific is gradually transforming from a commodity producer to a more stable cash-generative business by increasing revenues and EBITDA mix. Although LP’s adjusted EBITDA in 2023 declined year over year by 66% to $478 million, it achieved a $1.2 billion growth in adjusted EBITDA from 2019 to 2022. In fourth-quarter 2023, the metric grew 29% to $129 million year over year. For 2024, LP expects adjusted EBITDA between $495 million and $525 million, depicting growth year over year.
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Louisiana-Pacific’s shares have gained 10.3% year to date (YTD), outperforming the Zacks Building Products - Wood industry’s 1.9% rise. The company is benefiting from strategic business investments and cost-saving measures. Its emphasis on the Siding and OSB business segments is proving fruitful. The company holds the view that sustained growth in demand for environmentally friendly engineered wood siding in these markets is supported by long-term market trends and demographic shifts.
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased to $3.85 from $3.68 over the past 60 days, depicting analysts’ optimism over the company’s growth prospects. The estimated figure indicates 19.6% year-over-year growth. It carries an impressive VGM Score of A, making it a potentially interesting investment opportunity.
Zacks Rank & Key Picks
Louisiana-Pacific currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Construction sector are:
Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank #1 (Strong Buy). Sterling Infrastructure has a trailing four-quarter earnings surprise of 20.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of STRL have gained 20% YTD. The Zacks Consensus Estimate for STRL’s 2024 sales and EPS indicates a rise of 11.7% and 11.4%, respectively, from the prior-year levels.
Armstrong World Industries AWI currently flaunts a Zacks Rank #1. AWI delivered a trailing four-quarter earnings surprise of 13.1%, on average.
Shares of AWI have gained 20.7% YTD. The Zacks Consensus Estimate for AWI’s 2024 sales and EPS indicates growth of 4.1% and 7.9%, respectively, from the prior-year reported levels.
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Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
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