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Here's Why Builders FirstSource (BLDR) Surged 121% in the Past Year
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Builders FirstSource, Inc. (BLDR - Free Report) is benefiting from accretive acquisitions, focus on productivity savings and strategic digital enhancements.
Shares of BLDR have surged 120.6% in the past year against the Zacks Building Products - Retail industry’s 0.9% decline. The company’s uptrend was driven by growth in its acquisitions, attractive product mix and persistent digital investments. Earnings estimates for 2023 have moved north to $13.83 per share from earnings of $13.69 per share over the past 30 days. This supplier of building materials, manufactured components and construction services delivered a trailing four-quarter earnings surprise of 41.6%, on average.
Furthermore, this Zacks Rank #3 (Hold) company solidifies this growth prospect, with a VGM Score of A, backed by Value and Growth Scores of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the continuation of an outperformance in the near term.
Image Source: Zacks Investment Research
However, the high-cost environment and soft housing market are hurting the company’s growth prospects.
Here’s What Makes the Stock Appealing
Productivity Savings Boosting Growth: Builders FirstSource is focused on cost-saving initiatives and implementing various plans for the same. Owing to this, the company is expected to provide greater resources to invest in growth, innovation and non-stop value creation for all its shareholders.
Owing to these initiatives, the company has delivered $138 million in productivity savings during the first nine months of 2023. This value exceeded the prior expectation of $110-$150 million for the full year. The results reflected the successful utilization of the BFS One Team Operating System, improved procurement and SG&A efficiencies. For 2023, the company now expects to deliver between $140 million and $160 million in productivity savings.
Focus on Digital Enhancements: BLDR remains focused on investing in innovations and enhancing digital solutions for its customers. It is increasing its investment to support technology and automation that will deliver operational excellence and increased volume of sales. In the third quarter of 2023, Builders FirstSource made certain enhancements to its myBLDR.com customer portal. This portal acts as the gateway to the collaborative project management platform, enhancing transparency and engagement in the homebuilding process for both Builders FirstSource and its customers. The upgrades include supporting customers on its two primary ERP systems with statements & invoices, order status and deliveries along with product catalog expansion with homebuilder curation.
During the reporting quarter’s earnings call, the company stated its intention to launch the new BFS digital tool in 2024, to make the building process faster, efficient and affordable. The company’s digital strategy remains on track to capture an incremental $1 billion growth opportunity by 2026.
Strategic Buyouts: Acquisitions are an important part of Builders FirstSource's growth strategy to supplement its organic growth and expand extensively across vast geographic boundaries. The company's recent acquisitions have enhanced its value-added offerings and broadened its customer base in attractive markets.
During the first nine months of 2023, the company completed five accretive acquisitions for a total consideration of $156.7 million. It acquired Noltex Holdings, Inc. and its affiliates, Builder’s Millwork Supply, JB Millworks, Church’s Lumber and Frank’s Cash and Carry. These strategic buyouts have expanded its market reach in Texas, San Antonio, Alaska, Tennessee, Detroit, Michigan and a few others. In third-quarter 2023, the company's recent Multi-Family acquisitions contributed to a 2% sales increase and a 4% rise in EBITDA compared with the previous year's quarter.
Q3 Results Topped Estimates: In the third quarter of 2023, Builders FirstSource’s earnings and net sales surpassed the Zacks Consensus Estimate by 4.7% and 6.9%, respectively. This uptrend was backed by notable Multi-Family acquisition contributions, cost-savings initiatives and profitable investments. For 2023, the company expects Multi-Family starts to be up low double-digits while acquisitions completed within the past year are anticipated to add net sales growth of 2-3%.
Key Picks
Here are some better-ranked stocks that investors may consider from the Zacks Retail-Wholesale sector.
It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has increased 51.1% in the past year. The Zacks Consensus Estimate for WING’s 2023 sales and earnings per share (EPS) suggests increase of 26.3% and 29.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has increased 2.6% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5% and a 26.2% rise, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 137.9%, on average. The stock has gained 26.7% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS suggests an improvement of 0.8% and 2.9%, respectively, from the year-ago period’s levels.
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Here's Why Builders FirstSource (BLDR) Surged 121% in the Past Year
Builders FirstSource, Inc. (BLDR - Free Report) is benefiting from accretive acquisitions, focus on productivity savings and strategic digital enhancements.
Shares of BLDR have surged 120.6% in the past year against the Zacks Building Products - Retail industry’s 0.9% decline. The company’s uptrend was driven by growth in its acquisitions, attractive product mix and persistent digital investments. Earnings estimates for 2023 have moved north to $13.83 per share from earnings of $13.69 per share over the past 30 days. This supplier of building materials, manufactured components and construction services delivered a trailing four-quarter earnings surprise of 41.6%, on average.
Furthermore, this Zacks Rank #3 (Hold) company solidifies this growth prospect, with a VGM Score of A, backed by Value and Growth Scores of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the continuation of an outperformance in the near term.
Image Source: Zacks Investment Research
However, the high-cost environment and soft housing market are hurting the company’s growth prospects.
Here’s What Makes the Stock Appealing
Productivity Savings Boosting Growth: Builders FirstSource is focused on cost-saving initiatives and implementing various plans for the same. Owing to this, the company is expected to provide greater resources to invest in growth, innovation and non-stop value creation for all its shareholders.
Owing to these initiatives, the company has delivered $138 million in productivity savings during the first nine months of 2023. This value exceeded the prior expectation of $110-$150 million for the full year. The results reflected the successful utilization of the BFS One Team Operating System, improved procurement and SG&A efficiencies. For 2023, the company now expects to deliver between $140 million and $160 million in productivity savings.
Focus on Digital Enhancements: BLDR remains focused on investing in innovations and enhancing digital solutions for its customers. It is increasing its investment to support technology and automation that will deliver operational excellence and increased volume of sales. In the third quarter of 2023, Builders FirstSource made certain enhancements to its myBLDR.com customer portal. This portal acts as the gateway to the collaborative project management platform, enhancing transparency and engagement in the homebuilding process for both Builders FirstSource and its customers. The upgrades include supporting customers on its two primary ERP systems with statements & invoices, order status and deliveries along with product catalog expansion with homebuilder curation.
During the reporting quarter’s earnings call, the company stated its intention to launch the new BFS digital tool in 2024, to make the building process faster, efficient and affordable. The company’s digital strategy remains on track to capture an incremental $1 billion growth opportunity by 2026.
Strategic Buyouts: Acquisitions are an important part of Builders FirstSource's growth strategy to supplement its organic growth and expand extensively across vast geographic boundaries. The company's recent acquisitions have enhanced its value-added offerings and broadened its customer base in attractive markets.
During the first nine months of 2023, the company completed five accretive acquisitions for a total consideration of $156.7 million. It acquired Noltex Holdings, Inc. and its affiliates, Builder’s Millwork Supply, JB Millworks, Church’s Lumber and Frank’s Cash and Carry. These strategic buyouts have expanded its market reach in Texas, San Antonio, Alaska, Tennessee, Detroit, Michigan and a few others. In third-quarter 2023, the company's recent Multi-Family acquisitions contributed to a 2% sales increase and a 4% rise in EBITDA compared with the previous year's quarter.
Q3 Results Topped Estimates: In the third quarter of 2023, Builders FirstSource’s earnings and net sales surpassed the Zacks Consensus Estimate by 4.7% and 6.9%, respectively. This uptrend was backed by notable Multi-Family acquisition contributions, cost-savings initiatives and profitable investments. For 2023, the company expects Multi-Family starts to be up low double-digits while acquisitions completed within the past year are anticipated to add net sales growth of 2-3%.
Key Picks
Here are some better-ranked stocks that investors may consider from the Zacks Retail-Wholesale sector.
Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
It has a trailing four-quarter earnings surprise of 28.9%, on average. The stock has increased 51.1% in the past year. The Zacks Consensus Estimate for WING’s 2023 sales and earnings per share (EPS) suggests increase of 26.3% and 29.2%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has increased 2.6% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 5% and a 26.2% rise, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 137.9%, on average. The stock has gained 26.7% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS suggests an improvement of 0.8% and 2.9%, respectively, from the year-ago period’s levels.