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TopBuild Corp. (BLD) Hit a 52 Week High, Can the Run Continue?

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Have you been paying attention to shares of TopBuild (BLD - Free Report) ? Shares have been on the move with the stock up 18.5% over the past month. The stock hit a new 52-week high of $317.56 in the previous session. TopBuild has gained 99.7% since the start of the year compared to the 36.8% move for the Zacks Construction sector and the 43.3% return for the Zacks Building Products - Miscellaneous industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 31, 2023, TopBuild reported EPS of $5.43 versus consensus estimate of $4.59 while it beat the consensus revenue estimate by 1.78%.

For the current fiscal year, TopBuild is expected to post earnings of $19.51 per share on $5.2 billion in revenues. This represents a 14.03% change in EPS on a 3.73% change in revenues. For the next fiscal year, the company is expected to earn $20.40 per share on $5.51 billion in revenues. This represents a year-over-year change of 4.57% and 6.06%, respectively.

Valuation Metrics

TopBuild may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

TopBuild has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 16X current fiscal year EPS estimates, which is not in-line with the peer industry average of 17.2X. On a trailing cash flow basis, the stock currently trades at 14.7X versus its peer group's average of 11.1X. Additionally, the stock has a PEG ratio of 1.88. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, TopBuild currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if TopBuild passes the test. Thus, it seems as though TopBuild shares could still be poised for more gains ahead.

How Does BLD Stack Up to the Competition?

Shares of BLD have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Gibraltar Industries, Inc. (ROCK - Free Report) . ROCK has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of D.

Earnings were strong last quarter. Gibraltar Industries, Inc. beat our consensus estimate by 23.21%, and for the current fiscal year, ROCK is expected to post earnings of $4.63 per share on revenue of $1.38 billion.

Shares of Gibraltar Industries, Inc. have gained 6.7% over the past month, and currently trade at a forward P/E of 17.16X and a P/CF of 16.18X.

The Building Products - Miscellaneous industry is in the top 29% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BLD and ROCK, even beyond their own solid fundamental situation.

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