LOUISIANA-PACIFIC CORP (LPX) stock intrinsic value fair value estimate & owner earnings analysis

Louisiana-Pacific (LP Building Solutions) makes two kinds of wood building products. Siding (LP SmartSide engineered wood siding and trim, including the pre-finished ExpertFinish line) is a branded, steadily growing business: 2025 sales were $1.689 billion with $444 million of segment EBITDA, about 26% margins. OSB (oriented strand board sheathing plus value-added Structural Solutions panels) is a commodity business whose profits swing with panel prices: segment EBITDA was $298 million in 2024, $7 million in 2025, and management's August 2026 outlook calls for a $120 million loss in 2026 at July 2026 prices. A small operation in Chile and Brazil makes up most of the rest. How we measured earnings. We use owner earnings: operating cash flow with working-capital swings removed, less stock-based pay and the capital spending needed to keep the mills running. For this valuation we add back cash interest (about $14 million a year) to get the cash the business makes before its lenders, then subtract debt separately. Spending to grow capacity is not treated as a running cost; in years when revenue fell, all capital spending is treated as upkeep, which makes the trough years (2019, 2023, 2025) look somewhat worse than they were. Per share, business cash flow was $2.31 in 2018, $0.53 in 2019, $5.43 in 2020, $14.15 in 2021, $9.69 in 2022, $2.03 in 2023, $5.55 in 2024 and $1.47 in 2025. The 2020-2022 figures include the engineered wood products business sold to Pacific Woodtech in August 2022. Normal earning power. Because OSB is cyclical, we use the median of 2018-2025, a window that covers a full panel cycle: the 2018 high, the 2019 low, the 2021-22 boom, and the 2023 and 2025 lows. It also starts when LP began converting OSB mills to siding and cutting its share count, so it fits the company as it is today. Earlier years are left out because the company was then more heavily OSB and had about 145 million shares, against about 70 million now. The median is $3.87 per share, or about $270 million a year. That is consistent with a build-up from the segments: siding at its 2026 guided level (about $418 million EBITDA), an OSB contribution near $200 million in a middle-of-cycle year (the current mills earned $298 million in 2024 at unexceptional prices), and about $200 million a year of upkeep spending (management puts 2026 sustaining capital at about $180 million). Near-term path. Business cash flow per share fell about 73% in 2025. We do not extend that rate. Instead, the first year follows the company's own August 2026 outlook: siding EBITDA of $410-425 million, an OSB loss of about $120 million, and total EBITDA of $255-270 million. That works out to roughly $0.80 per share in the base case, a level close to the bottom of past cycles. Base case ($57.94). The trough lasts about a year. Cash flow recovers to $2.50 and then $3.50 per share as OSB returns to middle-of-cycle pricing, then holds at $3.87 indefinitely. We assume no siding growth beyond what holds that level, because recent gains have come partly from taking share from vinyl and fiber cement, which is not assured: siding volumes fell 14% in the first half of 2026 even as prices rose 8%. The mills, the SmartSide brand and the steady need for new and repaired housing are what keep the business earning after year ten. The business is worth about $4.2 billion ($60.07 per share). It owes $350 million of 3.625% notes due 2029. That debt costs less than our 6% rate until it matures, a benefit worth about $23 million. Against it sits about $178 million of cash above operating needs (cash was $228 million at June 30, 2026, and the $750 million credit line is undrawn). Net debt is about $149 million ($2.13 per share), leaving $57.94 per share. Bear case ($24.58). New industry capacity keeps OSB in surplus, and OSB earns close to nothing over the cycle. Siding stays flat at its depressed 2026 level with no volume recovery. Cash flow climbs from $0.50 to only $1.74 per share and stays there. The business is worth about $1.87 billion ($26.71 per share). After the same $149 million of net debt, that leaves $24.58. Even in this case cash flow covers interest of about $13 million many times over, and refinancing the 2029 notes at a higher rate would barely change the result. Bull case ($83.24). OSB has a normal cycle and siding keeps growing. The growth comes from capacity LP is already paying for (about $140 million of growth spending in 2026) and from its record of raising prices every year (siding prices rose 4% in 2025). Cash flow reaches $4.80 per share by year four, grows 3% a year to about $5.73 by year ten, and then holds flat. The business is worth about $5.98 billion ($85.37 per share), less $2.13 of net debt. What changed. Our earlier estimate used higher discount rates for riskier cases and assumed ongoing growth after year ten. We now use a single 6% rate, assume no growth after the evidence runs out, and base normal earnings on a full panel cycle. That raises the bear and base values and lowers the bull. Weak OSB prices in 2026 affect only the first years, not the normal level. What could make this wrong. A long slump in OSB with no recovery to middle-of-cycle earnings would pull value toward the bear case. A lasting loss of siding share to fiber cement or vinyl would matter more, because siding now produces most of the profit. On the other side, faster siding growth from the mill conversions now under way would push value toward the bull case.