Louisiana-Pacific (LPX) and Trex (TREX) Head-To-Head Analysis

Trex (NYSE: TREX) and Louisiana-Pacific (NYSE:LPX) are both mid-cap construction companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitability, valuation and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Trex 16.83% 46.94% 30.00%
Louisiana-Pacific 14.26% 24.05% 15.16%

Risk and Volatility

Trex has a beta of 2.24, indicating that its stock price is 124% more volatile than the S&P 500. Comparatively, Louisiana-Pacific has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Trex and Louisiana-Pacific, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trex 0 5 2 0 2.29
Louisiana-Pacific 1 6 3 0 2.20

Trex presently has a consensus target price of $98.33, suggesting a potential downside of 6.95%. Louisiana-Pacific has a consensus target price of $32.67, suggesting a potential upside of 9.11%. Given Louisiana-Pacific’s higher probable upside, analysts plainly believe Louisiana-Pacific is more favorable than Trex.

Dividends

Louisiana-Pacific pays an annual dividend of $0.52 per share and has a dividend yield of 1.7%. Trex does not pay a dividend. Louisiana-Pacific pays out 22.3% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Trex and Louisiana-Pacific’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trex $565.15 million 5.50 $95.12 million $3.16 33.44
Louisiana-Pacific $2.73 billion 1.59 $389.80 million $2.33 12.85

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

Institutional & Insider Ownership

91.0% of Trex shares are held by institutional investors. Comparatively, 94.9% of Louisiana-Pacific shares are held by institutional investors. 1.2% of Trex shares are held by company insiders. Comparatively, 0.5% of Louisiana-Pacific shares are held by company 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.

Summary

Trex beats Louisiana-Pacific on 10 of the 16 factors compared between the two stocks.

Trex Company Profile

Trex Company, Inc. manufactures and distributes wood/plastic composite products, and related accessories primarily for the residential and commercial decking, and railing applications in the United States. It offers Trex Transcend, Trex Enhance, and Trex Select protective shells for protection against fading, staining, mold, and scratching; and Trex Hideaway, a hidden fastening system for grooved boards. The company also provides railing products, such as Trex Transcend Railing for use with Trex decking products and other decking materials; Trex Select Railing for simple clean finished look; and Trex Signature aluminum railing for contemporary look. In addition, it offers Trex Seclusions fencing product, which includes structural posts, bottom and top rails, pickets, and decorative post caps; steel deck framing systems under the Trex Elevations name; Trex DeckLighting, a line of energy-efficient LED dimmable deck lighting for use on posts, floors, and steps; and Trex LandscapeLighting products. Further, the company acts as a licensor in various licensing agreements with third parties to manufacture and sell products under Trex name, including Trex Outdoor Furniture; Trex RainEscape, an above joist deck drainage system; Trex CustomCurve that allows contractors to heat and bend Trex products; Trex Pergola, a cellular PVC product; Trex Latticeworks outdoor lattice boards; Trex Cornhole boards; Diablo Trex Blade, a saw blade for wood-plastic composite decking; Trex SpiralStairs and structural steel posts; and Trex Outdoor Kitchens, Cabinetry, and Storage. Additionally, it offers architectural and aluminum railing systems, custom railing options, and portable stage platforms. The company sells its products through wholesale distributors, retail lumber dealers, and Home Depot and Lowe's stores, as well as through its direct sales staff, independent sales representatives, and bidding on projects. The company was founded in 1996 and is headquartered in Winchester, Virginia.

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.

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