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Builders FirstSource Q2 Preview: Can Shares Continue To Soar?

·3 min read

It’s been a strong week in the market so far, a development that every investor is undoubtedly celebrating.

In addition, earnings season is in high gear, another plus – stocks generally move up during the period. Now that the time has arrived, we have a surplus of companies unveiling quarterly results daily.

It goes without saying that this earnings season comes at a critical time, as investors are more than eager to discover how companies have sailed through the rough macroeconomic waters we’ve found ourselves in.

One company slated to release quarterly results before market open on Monday, August 1st, is Builders FirstSource BLDR.

Builders FirstSource is the largest supplier of building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers.

Let’s see how the company stacks up heading into the quarterly print.

Share Performance & Valuation

BLDR shares have struggled notably year-to-date, declining more than 20% in value and extensively underperforming the S&P 500.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

However, take a look at the chart below. Over the last month, buyers have entirely returned, pushing the stock price up an impressive 25%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

While the year-to-date share performance is less than desired, the recent price action of BLDR shares over the last month has been stellar, signaling that the worst could already be well behind.

In addition, the company sports a Style Score of an A for Value.

BLDR’s forward P/E ratio sits on the low side at 5.3X, precisely half of its five-year median value of 10.6X and representing a steep 71% discount relative to the general market.

However, investors should be aware of the cyclical nature that construction related stocks carry.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarterly Estimates

One analyst has raised their earnings outlook for the quarter over the last 60 days, with the Consensus Estimate Trend increasing nearly 5%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The Zacks Consensus EPS Estimate currently sits at $3.00, reflecting a notable 9% uptick in quarterly earnings year-over-year.

However, the company’s top-line is displaying some softening. Builders FirstSource is projected to generate $5.5 billion in revenue for the quarter, registering a slight 2% decrease from year-ago quarterly sales of $5.6 billion.

Quarterly Performance & Market Reactions

Bottom-line beats are the name of the game for BLDR – the company has impressively chained together 15 consecutive bottom-line beats. Just in its latest quarter, BLDR registered a sizable 81% EPS beat.

Quarterly sales numbers have also been impressive, with the company exceeding top-line estimates in eight of its previous ten quarters. Below is a chart that illustrates BLDR’s revenue on a quarterly basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Additionally, the market has liked what it’s seen from the company over its previous six quarters, with shares moving five times upwards following the quarterly release.

Bottom Line

BLDR shares have soared in July, tacking on a double-digit 25%, but are still in the red year-to-date. In addition, the company has solid valuation levels relative to the general market.

The company’s bottom-line is projected to register solid growth, but revenue projections indicate a year-over-year decrease.

Furthermore, Builders FirstSource has repeatedly surpassed quarterly estimates, and the market has reacted very well as of late to the company’s quarterly reports.

Heading into the print, Builders FirstSource BLDR carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 18%.


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