Louisiana Pacific: Why It's Still Not Attractive
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Wolf ReportInvesting Group LeaderFollow5ShareSavePlay(15min)CommentsSummaryLouisiana-Pacific (LPX) remains a 'HOLD' as the stock approaches my $70 fair value but is still overvalued versus fundamentals.LPX faces headwinds from housing market weakness, tariffs, declining OSB pricing, and a sub-1.4% yield, with EPS expected to drop 55% in 2025E.Despite a 14% share price drop and analyst downgrades, LPX trades at a 29x P/E premium, lacking a defensible valuation or sustainable margin upside.Siding segment resilience is offset by volatility, and alternatives like UPM offer better diversification, yield, and tariff insulation. Richard Drury/DigitalVision via Getty Images I am writing this update to you today because of a market movement (which has normalized by the time the market opened). My last coverage on Louisiana-Pacific (LPX) is now about 3This article was written byWolf Report34.49K FollowersFollowWolf Report is a senior analyst and private portfolio manager with over 10 years of generating value ideas in European and North American markets.He covers the markets of Scandinavia, Germany, France, UK, Italy, Spain, Portugal and Eastern Europe in search of reasonably valued stock ideas.Analyst’s Disclosure:I/we have a beneficial long position in the shares of UPMMY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. Short-term trading, options trading/investment and futures trading are potentially extremely risky investment styles. They generally are not appropriate for someone with limited capital, limited investment experience, or a lack of understanding for the necessary risk tolerance involved. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. I own the Canadian tickers of all Canadian stocks I write about. Please note that investing in European/Non-US stocks comes with withholding tax risks specific to the company's domicile as well as your personal situation. Investors should always consult a tax professional as to the overall impact of dividend withholding taxes and ways to mitigate these.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsWhat drives the continued 'HOLD' rating for LPX despite the recent price drop?LPX remains overvalued at nearly 29x P/E, with weak growth, declining margins, and a sub-1.4% yield; my $50/share PT reflects these headwinds.How do tariffs and housing market trends impact LPX’s forward earnings outlook?Tariffs and a soft housing market pressure OSB pricing and volumes, with 2025E EPS forecast to decline 55% and no clear catalyst for sustainable recovery.Are there more attractive alternatives to LPX in the sector?Yes, UPM offers better diversification, a higher dividend, and less tariff exposure, making it a preferable choice over LPX at current valuations.Recommended For You