Critical Analysis: Louisiana-Pacific (LPX) and Enviva Partners (EVA)

Louisiana-Pacific (NYSE: LPX) and Enviva Partners (NYSE:EVA) are both construction companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Valuation and Earnings

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This table compares Louisiana-Pacific and Enviva Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Louisiana-Pacific $2.73 billion 1.57 $389.80 million $2.33 12.68
Enviva Partners $543.22 million 1.35 $17.51 million $0.61 45.57

Louisiana-Pacific has higher revenue and earnings than Enviva Partners. Louisiana-Pacific is trading at a lower price-to-earnings ratio than Enviva Partners, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Louisiana-Pacific and Enviva Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Louisiana-Pacific 14.26% 24.05% 15.16%
Enviva Partners 3.80% 7.65% 2.89%

Volatility and Risk

Louisiana-Pacific has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500. Comparatively, Enviva Partners has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Institutional & Insider Ownership

94.6% of Louisiana-Pacific shares are held by institutional investors. 1.5% of Louisiana-Pacific shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Louisiana-Pacific pays an annual dividend of $0.52 per share and has a dividend yield of 1.8%. Enviva Partners pays an annual dividend of $2.48 per share and has a dividend yield of 8.9%. Louisiana-Pacific pays out 22.3% of its earnings in the form of a dividend. Enviva Partners pays out 406.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Enviva Partners has increased its dividend for 2 consecutive years. Enviva Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Louisiana-Pacific and Enviva Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Louisiana-Pacific 1 7 3 0 2.18
Enviva Partners 0 0 2 0 3.00

Louisiana-Pacific currently has a consensus price target of $31.86, suggesting a potential upside of 7.84%. Enviva Partners has a consensus price target of $33.50, suggesting a potential upside of 20.50%. Given Enviva Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Enviva Partners is more favorable than Louisiana-Pacific.

Summary

Louisiana-Pacific beats Enviva Partners on 12 of the 17 factors compared between the two stocks.

Louisiana-Pacific Company Profile

Louisiana-Pacific Corporation, together with its subsidiaries, manufactures building products primarily for use in new home construction, repair and remodeling, and outdoor structures, as well as 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 Siding segment offers siding products and related accessories, such as wood-based siding, trim, soffit, and fascia products; and CanExel siding and accessory products, including pre-finished lap and trim products, as well as outdoor building products. The OSB segment manufactures and distributes structural panel products comprising OSBs, TechShield radiant barriers, TopNotch sub-floorings, Legacy super tough products, moisture-resistant sub-floorings, and FlameBlock fire-rated sheathing products. The Engineered Wood Products segment provides laminated veneer lumber, laminated strand lumber, and other related products; and I-joists, which are used principally in residential and commercial floorings, roofing systems, and other structural applications. The South America segment manufactures and distributes OSB and siding products in South America and various export markets. This segment also distributes and sells related products to augment the transition to wood frame construction. The company also offers timber and timberlands, as well as other products and services. Louisiana-Pacific Corporation sells its products, primarily to retail home centers, manufactured housing producers, distributors, and wholesalers in North America and South America, as well as in Asia, Australia, and Europe. The company was founded in 1973 and is headquartered in Nashville, Tennessee.

Enviva Partners Company Profile

Enviva Partners, LP is a supplier of utility-grade wood pellets to power generators. The Company procures wood fiber and processes it into utility-grade wood pellets and loads the finished wood pellets into railcars, trucks and barges that are transported to deep-water marine terminals, where they are received, stored and loaded onto oceangoing vessels for transport to the Company’s principally Northern European customers. The Company’s principal product, utility-grade wood pellets, is a traded energy commodity that is used as a substitute for coal in both dedicated and co-fired power generation and combined heat and power plants. It enables power generators to generate electricity. The Company’s customers use its wood pellets as a substitute fuel for coal in dedicated biomass or co-fired coal power plants. Wood pellets are exported from the Company’s deep-water marine terminal in Chesapeake, Virginia, from a deep-water marine terminal in Wilmington, North Carolina.

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