TopBuild Corp. BLD recently announced the acquisition of a commercial glass company — Cooper Glass Co, LLC. This will enable it to penetrate into the Memphis market. However, financial terms of the transaction have been kept under wraps.
Benefits of the Buyout
Cooper Glass — now part of TopBuild’s TruTeam — is a residential and commercial glass services provider that primarily serves in Memphis, TN.
The acquired company offers services such as door repairs, glass replacements, mirrors and other glass-related repairs to aluminum storefronts as well as entrances. It also specializes in Residential Glazing and Commercial Contract Glazing services.
Courtesy of its high-quality control standards and best-in-class execution, the acquisition is expected to enhance TopBuild’s glass installation business in the Memphis region.
Jerry Volas, Chief Executive Officer of TopBuild, stated, “Cooper Glass is a great addition to TruTeam and will broaden and enhance our existing $150 million glass installation business. We are pleased to welcome Martin to TopBuild and look forward to him growing our market share in the Memphis region.”
Acquisitions Bode Well
Acquisitions are an integral part of TopBuild’s growth strategy. Since 2017, the company has acquired 10 insulation businesses, which generated more than $350 million of net sales.
Its recent addition of Burbank, CA-based Viking Insulation — an insulation installation company — is expected to be a boon for the company.
Notably, the company expects solid improvement in net sales and earnings as well as plans to invest more in such companies going forward.
Coming to price performance, shares of TopBuild have surged 109.5% in the past year compared with the industry's 21.1% rally. The soild price performance was primarily backed by strong earnings and revenue growth in the past three quarters. The upside was mainly driven by the USI acquisition and increased selling prices. Also, higher sales growth in the Installation segment and operational efficiencies added to tailwinds. Apart from these improvements, the performance was backed by a solid earnings surprise history. The company’s earnings have surpassed the Zacks Consensus Estimate in 12 of the trailing 13 quarters. Moreover, earnings estimates for 2020 have inched up 0.5% in the past 60 days, which reflects analysts’ optimism over the company’s prospects.
Zacks Rank & Key Picks
TopBuild currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space are Installed Building Products, Inc. IBP, Armstrong World Industries, Inc. AWI and CRH plc CRH. Installed Building Products sports a Zacks Rank #1, while Armstrong World and CRH carry a Zacks Rank #2 (Buy).
Installed Building Products has three-five year expected EPS growth rate of 16%.
Armstrong World and CRH plc’s 2020 earnings are expected to rise 12.3% and 15.3%, respectively.
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