Norbord (OSB) Hits 52-Week High: What's Driving The Stock?

Building products manufacturer, Norbord Inc.’s (NYSE:OSB) shares scaled a new 52-week high of $32.44 during its trading session on Jul 13. This improved upon the last 52-week high of $32.37, a day earlier.

In the last one year, shares of the company have yielded 50.82% return, outperforming the gain of 9.33% recorded by the Zacks categorized Building Products Wood industry.

On Jul 13, Norbord closed its trading session at $32.32 per share, yielding a year-to-date return of roughly 28%. Positive earnings estimate revisions for 2017 as well as solid future prospects indicate the stock’s potential for further price appreciation.

Growth Drivers

We believe that Norbord is committed toward expanding and modernizing its existing Oriented Strand Board (OSB) mills and hence, improving its overall operations and profitability going forward. For instance, the company plans to invest roughly $135 million for the development of its Inverness, Scotland OSB mill. Also, it is working on a plan for upgrading its Chambord, Quebec OSB mill. In Jun 2017, the company secured wood allocation for its Chambord mill.

In addition, Norbord prefers rewarding its shareholders through healthy dividend payments. In May 2017, the company tripled its quarterly dividend rate to C$0.30 per share. The hike was primarily driven by its healthy cash flow position and fall in net debt-to-capitalization ratio.

Going forward, improving housing market conditions in the U.S. will likely drive Norbord’s results. Per the consensus forecast from U.S. housing economists, housing starts will likely improve 8% year over year to 1.26 million in 2017. Also, the company is seeing strong product demand from prime customers, better pricing and lower supply chain inventories, which is likely to drive its results in second-quarter 2017. Results is slated to be released on Jul 28, before the market opens.

We believe that Norbord’s solid prospects have led to the positive revisions in earnings estimates. Over the last 60 days, the stock’s Zacks Consensus Estimate increased 16% to $3.26 for 2017. Also, the company has an Earnings ESP of +13.50% for 2017. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank & Stocks to Consider

With a market capitalization of $2.61 billion, Norbord currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Louisiana-Pacific Corporation (NYSE:LPX) , Trex Company Inc. (NYSE:TREX) and Weyerhaeuser Company (NYSE:WY) . While Louisiana-Pacific sports a Zacks Rank #1(Strong Buy), both Trex Company and Weyerhaeuser carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Louisiana-Pacific’s financial performance has been impressive, with an average positive earnings surprise of 5.39% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward, over the last 60 days.

Trex Company pulled off an average positive earnings surprise of 7.45% over the last four quarters. Its earnings estimates for 2017 and 2018 have been revised upward, over the last 60 days.

Weyerhaeuser Company delivered a positive earnings surprise of 22.22% in the last quarter. Its earnings estimates for 2017 have been revised upward, over the last 60 days.

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