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In the last reported quarter, the company’s adjusted earnings and net sales topped the Zacks Consensus Estimate by 44.6% and 6.6%, respectively. However, both metrics declined by 37.9% and 34.6%, respectively, from the year-ago quarter’s level.
The company’s earnings have topped the consensus mark in each of the trailing 20 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for BLDR’s third-quarter earnings is pegged at $4.05 per share, indicating a 22.1% decrease from the prior year’s reported figure of $5.20. Nonetheless, the estimated figure reflects an upward revision of 27 cents in the past 60 days.
The consensus estimate for net sales is pinned at $4.87 billion, suggesting a 15.5% decline from the year-ago quarter’s reported figure of $5.76 billion.
Factors to Note
Builders FirstSource’s business is primarily dependent on new residential construction as well as repair and remodeling activities. Ongoing challenges in the housing industry, comprising softer housing starts, rising mortgage rates as well as reduced repair and remodeling activities due to lower consumer spending, are likely to have affected the company’s net sales.
However, low-existing homes for sale are driving construction opportunities for new homes’ sales. This is likely to have boosted demand for its structural and related building products, which, in turn, may help the company post sequentially higher net sales in the quarter to be reported.
BLDR’s focus on cost synergies, strategic acquisitions, digital solutions and productivity, as well as investments in innovations and value-added products, are expected to have offset the negatives to some extent.
Segment-wise, our model predicts Value-Added Products’ sales (comprising 52.8% of second-quarter 2023 net sales) to be $2.5 billion, down 9.9% year over year but up 4.4% sequentially.
We expect Specialized Product & Other sales (comprising 23.8% of second-quarter 2023 net sales) to be $1,060.7 million, down 9.6% year over year and 1.5% sequentially.
Our model predicts Lumber & Lumber Sheet Goods’ sales (comprising 23.4% of second-quarter 2023 net sales) to be $1.23 billion, down 32.4% year over year but up 16% sequentially.
From the margin perspective, supply-related constraints and high costs associated with raw materials, labor and transportation are expected to have put pressure on the third quarter’s margins.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Builders FirstSource 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. This is not the case here, as elaborated below.
Currently, it sports a Zacks Rank #1 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks Poised to Beat Estimates
Here are some stocks worth considering from the Zacks Retail-Wholesale space, as our model shows that they have the right combination of elements to beat on earnings this season.
Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +1.87% and sports a Zacks Rank #1.
The stock has jumped 231% in the past year. ANF’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 724.8%.
Shares of SBUX have gained 12.5% in the past year. SBUX’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 7.31%.
The Wendy's Company (WEN - Free Report) has an Earnings ESP of +2.30% and a Zacks Rank #3.
WEN’s earnings for the to-be-reported quarter are expected to increase 8.3% year over year. The company reported better-than-expected earnings in the trailing four quarters, the average surprise being 4.8%.
Image: Shutterstock
What to Note Ahead of Builders FirstSource's (BLDR) Q3 Earnings
Builders FirstSource, Inc. (BLDR - Free Report) is slated to report third-quarter 2023 results on Nov 1, before the opening bell.
In the last reported quarter, the company’s adjusted earnings and net sales topped the Zacks Consensus Estimate by 44.6% and 6.6%, respectively. However, both metrics declined by 37.9% and 34.6%, respectively, from the year-ago quarter’s level.
The company’s earnings have topped the consensus mark in each of the trailing 20 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for BLDR’s third-quarter earnings is pegged at $4.05 per share, indicating a 22.1% decrease from the prior year’s reported figure of $5.20. Nonetheless, the estimated figure reflects an upward revision of 27 cents in the past 60 days.
Builders FirstSource, Inc. Price and EPS Surprise
Builders FirstSource, Inc. price-eps-surprise | Builders FirstSource, Inc. Quote
The consensus estimate for net sales is pinned at $4.87 billion, suggesting a 15.5% decline from the year-ago quarter’s reported figure of $5.76 billion.
Factors to Note
Builders FirstSource’s business is primarily dependent on new residential construction as well as repair and remodeling activities. Ongoing challenges in the housing industry, comprising softer housing starts, rising mortgage rates as well as reduced repair and remodeling activities due to lower consumer spending, are likely to have affected the company’s net sales.
However, low-existing homes for sale are driving construction opportunities for new homes’ sales. This is likely to have boosted demand for its structural and related building products, which, in turn, may help the company post sequentially higher net sales in the quarter to be reported.
BLDR’s focus on cost synergies, strategic acquisitions, digital solutions and productivity, as well as investments in innovations and value-added products, are expected to have offset the negatives to some extent.
Segment-wise, our model predicts Value-Added Products’ sales (comprising 52.8% of second-quarter 2023 net sales) to be $2.5 billion, down 9.9% year over year but up 4.4% sequentially.
We expect Specialized Product & Other sales (comprising 23.8% of second-quarter 2023 net sales) to be $1,060.7 million, down 9.6% year over year and 1.5% sequentially.
Our model predicts Lumber & Lumber Sheet Goods’ sales (comprising 23.4% of second-quarter 2023 net sales) to be $1.23 billion, down 32.4% year over year but up 16% sequentially.
From the margin perspective, supply-related constraints and high costs associated with raw materials, labor and transportation are expected to have put pressure on the third quarter’s margins.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Builders FirstSource 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. This is not the case here, as elaborated below.
Currently, it sports a Zacks Rank #1 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks Poised to Beat Estimates
Here are some stocks worth considering from the Zacks Retail-Wholesale space, as our model shows that they have the right combination of elements to beat on earnings this season.
Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +1.87% and sports a Zacks Rank #1.
The stock has jumped 231% in the past year. ANF’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 724.8%.
Starbucks Corporation (SBUX - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of SBUX have gained 12.5% in the past year. SBUX’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 7.31%.
The Wendy's Company (WEN - Free Report) has an Earnings ESP of +2.30% and a Zacks Rank #3.
WEN’s earnings for the to-be-reported quarter are expected to increase 8.3% year over year. The company reported better-than-expected earnings in the trailing four quarters, the average surprise being 4.8%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.