Bear of the Day: Louisiana-Pacific (LPX)

With the market coming strong off the lows, it may seem tempting to find the hottest stock and jump on board. Most of us simply can’t call the exact bottom, nor the exact top of these hot stocks, I’ll admit it. However, by buying stocks with strong earnings trends, you give yourself the best chance of finding long-term profits. You should also try to avoid stocks doing the opposite. That is, stocks with earnings trends that are sinking. Making less and less every year is not a compelling story for astute investors.

One of these stocks with a weaker earnings trend is today’s Bear of the Day. I’m talking about Zacks Rank #5 (Strong Sell)Louisiana Pacific (LPX). Louisiana-Pacific Corporation, together with its subsidiaries, manufactures building products primarily for use in new home construction, repair and remodeling, and outdoor structure markets. It also markets and sells products for use in light industrial and commercial construction applications. It operates through four segments: Siding; North America Oriented Strand Board (OSB); Engineered Wood Products; and South America.

The reason for the unfavorable Zacks Rank lies in the series of earnings estimate revisions to the downside coming from analysts. Over the last sixty days, two analysts have cut their estimates for the current quarter. Four analysts have cut estimates for the current year. Those bearish moves have dropped our Zacks Consensus Estimates for the current quarter from 46 cents to 25 cents while current year estimates have come down from $1.54 to 83 cents. Next year’s numbers are down as well, dipping from $2.47 to $2.01. It’s no wonder that shares have gone from trading north of $30 in September 2018 to the $23 level where they trade at currently.

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