TopBuild Corp. BLD is slated to report fourth-quarter 2019 results on Feb 25, before the opening bell.
The company reported better-than-expected results in third-quarter 2019. Also, earnings and sales grew 24.4% and 5.4%, respectively, on a year-over-year basis. The upside was backed by its national scale, strong customer and supplier relationships, as well as operational efficiency initiatives.
Trend in Estimate Revision
The Zacks Consensus Estimate for earnings for the quarter to be reported has been unchanged at $1.40 per share over the past 60 days. The said figure indicates a 16.7% increase from the year-ago earnings of $1.20 per share. The consensus mark for revenues is $673.25 million, suggesting a 5.3% year-over-year improvement.
TopBuild Corp. Price and EPS Surprise
TopBuild Corp. price-eps-surprise | TopBuild Corp. Quote
Factors to Note
TopBuild’s insulation and building material services business has been gaining from strong economic fundamentals, acquisition synergies, and operational efficiencies. Also, strong customer and supplier relationships have been aiding its top-line growth.
Acquisitions have been an integral part of the company’s growth strategy. On Jul 15, 2019, it acquired Viking Insulation. Owing to this buyout, TopBuild is expected to have registered solid improvement in net sales and earnings. Moreover, the company plans to close some low-margin businesses to focus on core areas in a bid to accelerate growth and improve shareholder value.
Although its business has been witnessing lower sales volumes — primarily in the Distribution segment — increased selling prices, favorable weather conditions and solid starts data are commendable.
TruTeam: The segment has been banking on strengthening residential and commercial insulation business. A solid homebuilding industry, and increased volume and pricing are expected to reflect on the to-be-reported quarter’s results.
The consensus estimate for the segment’s revenues is pegged at $485 million, indicating a 6% increase from the year-ago period. The same for operating profit is $64 million, pointing to growth of 12.3% year over year.
Service Partners: This segment enjoys various competitive advantages like combined buying power, healthy relationship with major manufacturers of insulation and other building products, as well as limited exposure to cyclical swings in business.
The consensus mark for the segment’s revenues is $220 million, suggesting growth of 2.8% year over year. The same for operating profit is pegged at $22.4 million, implying 3.7% increase from a year ago.
What Our Model Suggests
Our proven model doesn’t conclusively predict an earnings beat for TopBuild this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
TopBuild — which shares space with Foundation Building Materials, Inc. FBM, Installed Building Products, Inc. IBP and Simpson Manufacturing Co., Inc. SSD in the Zacks Building Products - Miscellaneous industry — has an Earnings ESP of 0.00% and currently carries a Zacks Rank #3. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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