Louisiana-Pacific's Weaker First Quarter Looks Like A Bump Along The Bottom

When I last wrote about Louisiana-Pacific (LPX) in February, I thought that the shares were an iffy prospect given the run since last December and with weak near-term prospects for housing activity and OSB pricing. With the shares down about $1 since then (a little less than 5%), I really don’t feel like I missed out on much, as LP is going to have to spend a little time here bumping along the bottom of the OSB cycle.

Relative to a fair value in the high $20’s based on my estimate of “full-cycle EBITDA”, I think LP shares are a little undervalued, but not so dramatically so that I feel inspired to do much – this is an “apples to oranges” comparison, but Weyerhaeuser (WY) looks more substantially undervalued, offers a sizable payout, and has some similar underlying drivers (namely, housing).

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Louisiana-Pacific's Weaker First Quarter Looks Like A Bump Along The Bottom