Builders FirstSource, Inc. (NYSE:BLDR) Just Reported And Analysts Have Been Lifting Their Price Targets
It's been a good week for Builders FirstSource, Inc. (NYSE:BLDR) shareholders, because the company has just released its latest yearly results, and the shares gained 2.7% to US$189. The result was positive overall - although revenues of US$17b were in line with what the analysts predicted, Builders FirstSource surprised by delivering a statutory profit of US$11.94 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Builders FirstSource
Taking into account the latest results, the consensus forecast from Builders FirstSource's 17 analysts is for revenues of US$17.9b in 2024. This reflects a modest 4.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 5.0% to US$12.00 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$17.6b and earnings per share (EPS) of US$11.13 in 2024. So the consensus seems to have become somewhat more optimistic on Builders FirstSource's earnings potential following these results.
The consensus price target rose 11% to US$206, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Builders FirstSource at US$242 per share, while the most bearish prices it at US$164. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Builders FirstSource's revenue growth is expected to slow, with the forecast 4.9% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last five years. Compare this to the 53 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while Builders FirstSource's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Builders FirstSource's earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Builders FirstSource. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Builders FirstSource analysts - going out to 2025, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Builders FirstSource that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
