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Builders FirstSource (BLDR) Up 138% in a Year: What's Driving It?
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Builders FirstSource, Inc. (BLDR - Free Report) has been riding high, given its digital enhancements, a strong value-added product portfolio and the positive impact of operational initiatives implemented in recent years.
Although high costs and persistent economic risks are primary headwinds for this Zacks Rank #3 (Hold) company, shares of this one of the largest suppliers of building materials have advanced 138.2% over the past year given the above-mentioned tailwinds. It has broadly outperformed the Zacks Building Products – Retail industry’s 7% rise.
The company’s earnings estimates for 2024 have moved north to $12.82 per share from of $12.73 over the past 60 days. BLDR also delivered a trailing four-quarter earnings surprise of 41.6%, on average. It also has a favorable VGM Score of A, making it a potentially interesting investment opportunity.
Image Source: Zacks Investment Research
Let’s Discuss Factors Driving the Stock
Digital Advancement: Builders FirstSource is committed to prioritizing the digital platform, continually investing in innovations and bolstering digital solutions for its clientele. The company is dedicated to leveraging cutting-edge digital technologies to streamline homebuilding processes, thereby improving the efficiency of its products and services. An exemplar of this commitment is the widespread implementation of Paradigm Estimate across its operations, facilitating quicker and more precise customer quotes.
Notably, by the third quarter of 2023, the company had successfully generated 20,000 automated take-off estimates using Paradigm technology from customer plans, showcasing an impressive 225% year-over-year growth. Additionally, Builders FirstSource has introduced the Minimum Viable Product of its builder portal, myBLDR.com. This portal not only expedites the process of selling digital services but also extends the company's reach to a broader customer base.
Buyouts: Builders FirstSource relies on acquisitions as a key component of its growth strategy, complementing organic expansion and facilitating extensive geographic diversification. In the initial three quarters of 2023, the company successfully concluded five value-adding acquisitions totaling $156.7 million. Noteworthy among these acquisitions are Noltex Holdings, Inc. and its affiliated entities, including Builder’s Millwork Supply, JB Millworks, Church’s Lumber, and Frank’s Cash and Carry. These strategic acquisitions have significantly broadened the company's market presence in various regions, including Texas, San Antonio, Alaska, Tennessee, Detroit, Michigan, and others. During the third quarter of 2023, the company's recent acquisitions in the Multi-Family sector played a pivotal role, contributing to a 2% increase in sales and 4% growth in EBITDA compared with the corresponding quarter in the previous year.
Focus on Productivity: Builders FirstSource had $123 million in productivity savings for 2022, exceeding its $100 million target. In the first nine months of 2023, the company had $138 million in productivity savings. This impressive uptrend was driven by the successful utilization of the BFS One Team Operating System, improved procurement and SG&A efficiencies. The company now expects to deliver $140-$160 million (prior expectation of $110-$150 million) in productivity savings in 2023.
Key Picks
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
The Zacks Consensus Estimate for SHAK’s 2024 sales and earnings per share (EPS) suggests increases of 15.2% and 38.3%, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) carries a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 28.3%, on average. Shares of ARCO have surged 42% in the past year.
The Zacks Consensus Estimate for ARCO’s 2024 sales and EPS indicates 10.6% and 15.5% growth, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has gained 11.7% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS suggests a rise of 5% and 26.2%, respectively, from the year-ago period’s levels.
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Builders FirstSource (BLDR) Up 138% in a Year: What's Driving It?
Builders FirstSource, Inc. (BLDR - Free Report) has been riding high, given its digital enhancements, a strong value-added product portfolio and the positive impact of operational initiatives implemented in recent years.
Although high costs and persistent economic risks are primary headwinds for this Zacks Rank #3 (Hold) company, shares of this one of the largest suppliers of building materials have advanced 138.2% over the past year given the above-mentioned tailwinds. It has broadly outperformed the Zacks Building Products – Retail industry’s 7% rise.
The company’s earnings estimates for 2024 have moved north to $12.82 per share from of $12.73 over the past 60 days. BLDR also delivered a trailing four-quarter earnings surprise of 41.6%, on average. It also has a favorable VGM Score of A, making it a potentially interesting investment opportunity.
Image Source: Zacks Investment Research
Let’s Discuss Factors Driving the Stock
Digital Advancement: Builders FirstSource is committed to prioritizing the digital platform, continually investing in innovations and bolstering digital solutions for its clientele. The company is dedicated to leveraging cutting-edge digital technologies to streamline homebuilding processes, thereby improving the efficiency of its products and services. An exemplar of this commitment is the widespread implementation of Paradigm Estimate across its operations, facilitating quicker and more precise customer quotes.
Notably, by the third quarter of 2023, the company had successfully generated 20,000 automated take-off estimates using Paradigm technology from customer plans, showcasing an impressive 225% year-over-year growth. Additionally, Builders FirstSource has introduced the Minimum Viable Product of its builder portal, myBLDR.com. This portal not only expedites the process of selling digital services but also extends the company's reach to a broader customer base.
Buyouts: Builders FirstSource relies on acquisitions as a key component of its growth strategy, complementing organic expansion and facilitating extensive geographic diversification. In the initial three quarters of 2023, the company successfully concluded five value-adding acquisitions totaling $156.7 million. Noteworthy among these acquisitions are Noltex Holdings, Inc. and its affiliated entities, including Builder’s Millwork Supply, JB Millworks, Church’s Lumber, and Frank’s Cash and Carry. These strategic acquisitions have significantly broadened the company's market presence in various regions, including Texas, San Antonio, Alaska, Tennessee, Detroit, Michigan, and others. During the third quarter of 2023, the company's recent acquisitions in the Multi-Family sector played a pivotal role, contributing to a 2% increase in sales and 4% growth in EBITDA compared with the corresponding quarter in the previous year.
Focus on Productivity: Builders FirstSource had $123 million in productivity savings for 2022, exceeding its $100 million target. In the first nine months of 2023, the company had $138 million in productivity savings. This impressive uptrend was driven by the successful utilization of the BFS One Team Operating System, improved procurement and SG&A efficiencies. The company now expects to deliver $140-$160 million (prior expectation of $110-$150 million) in productivity savings in 2023.
Key Picks
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
Shake Shack Inc. (SHAK - Free Report) currently flaunts a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 80.8%, on average. Shares of SHAK have surged 24.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SHAK’s 2024 sales and earnings per share (EPS) suggests increases of 15.2% and 38.3%, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) carries a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 28.3%, on average. Shares of ARCO have surged 42% in the past year.
The Zacks Consensus Estimate for ARCO’s 2024 sales and EPS indicates 10.6% and 15.5% growth, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 223.6%, on average. The stock has gained 11.7% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS suggests a rise of 5% and 26.2%, respectively, from the year-ago period’s levels.