Comparing Potlatch (NASDAQ:PCH) and Louisiana-Pacific (NYSE:LPX)

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

Volatility and Risk

Potlatch has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Louisiana-Pacific has a beta of 1.84, suggesting that its stock price is 84% more volatile than the S&P 500.

Dividends

Potlatch pays an annual dividend of $1.80 per share and has a dividend yield of 4.3%. Louisiana-Pacific pays an annual dividend of $1.12 per share and has a dividend yield of 1.2%. Potlatch pays out 339.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Louisiana-Pacific pays out 19.6% of its earnings in the form of a dividend. Louisiana-Pacific has raised its dividend for 7 consecutive years.

Institutional & Insider Ownership

86.1% of Potlatch shares are owned by institutional investors. Comparatively, 94.7% of Louisiana-Pacific shares are owned by institutional investors. 1.0% of Potlatch shares are owned by insiders. Comparatively, 1.4% of Louisiana-Pacific shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potlatch	0	0	7	0	3.00
Louisiana-Pacific	2	2	4	0	2.25

Potlatch presently has a consensus target price of $50.00, indicating a potential upside of 18.20%. Louisiana-Pacific has a consensus target price of $106.13, indicating a potential upside of 16.79%. Given Potlatch’s stronger consensus rating and higher probable upside, research analysts clearly believe Potlatch is more favorable than Louisiana-Pacific.

Valuation & Earnings

This table compares Potlatch and Louisiana-Pacific”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potlatch	$1.06 billion	3.13	$21.88 million	$0.53	79.81
Louisiana-Pacific	$2.94 billion	2.15	$420.00 million	$5.70	15.94

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Potlatch	3.94%	2.10%	1.29%
Louisiana-Pacific	13.74%	23.75%	15.50%

Summary

Louisiana-Pacific beats Potlatch on 11 of the 17 factors compared between the two stocks.

About Potlatch

PotlatchDeltic Corporation (Nasdaq: PCH) is a leading Real Estate Investment Trust (REIT) that owns nearly 2.2 million acres of timberlands in Alabama, Arkansas, Georgia, Idaho, Louisiana, Mississippi and South Carolina. Through its taxable REIT subsidiary, the company also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program. PotlatchDeltic, a leader in sustainable forest management, is committed to environmental and social responsibility and to responsible governance.

About Louisiana-Pacific

Louisiana-Pacific Corporation, together with its subsidiaries, provides building solutions primarily for use in new home construction, repair and remodeling, and outdoor structure markets. It operates through Siding, Oriented Strand Board, LP South America, and Other segments. The Siding segment offers LP SmartSide trim and siding products, LP SmartSide ExpertFinish trim and siding products, LP BuilderSeries lap siding products, and LP Outdoor Building Solutions; and engineered wood siding, trim, soffit, and fascia products. Its Oriented Strand Board segment manufactures and distributes oriented strand board structural panel products comprising LP TechShield radiant barriers, LP WeatherLogic air and water barriers, LP Legacy premium sub-flooring products, LP NovaCore, LP FlameBlock fire-rated sheathing products, and LP TopNotch sub-flooring products. The LP South America segment manufactures and distributes oriented strand board structural panel and siding products. This segment distributes and sells related products for the region's transition to wood frame construction. It offers timber and timberlands and other products and services. sells its products primarily to retailers, wholesalers, and homebuilding and industrial businesses in North America and South America, Asia, Australia, and Europe. The company was incorporated in 1972 and is headquartered in Nashville, Tennessee.