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What Lies Ahead of Builders FirstSource's (BLDR) Q4 Earnings

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Builders FirstSource, Inc. (BLDR - Free Report) is slated to report fourth-quarter 2023 results on Feb 22, before the opening bell.

In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 4.7% but net sales missed the mark by 6.9%. Both earnings and net sales declined 18.5% and 21.3%, respectively, from the year-ago quarter’s level.

The company’s earnings have topped the consensus mark in each of the trailing 21 quarters.

Builders FirstSource, Inc. Price and EPS Surprise

Builders FirstSource, Inc. Price and EPS Surprise

Builders FirstSource, Inc. price-eps-surprise | Builders FirstSource, Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) has declined to $2.70 from $2.71 over the past 60 days. The said figure indicates a 15.9% decline from the year-ago EPS of $3.21.
The consensus estimate for net sales is pinned at $4.01 billion, suggesting a 7.9% decline from the year-ago quarter’s reported figure of $4.36 billion.

Factors to Note

Builders FirstSource’s business is primarily dependent on new residential construction as well as repair and remodeling activities. Softer housing demand compared to the year-ago period owing to higher mortgage rates is expected to have weighed on BLDR’s quarterly performance.

However, low-existing homes for sale and single-family housing starts 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 better 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.

From the margin perspective, high costs associated with raw materials, labor and transportation are expected to have put pressure on the fourth-quarter margins. That said, 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.

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, the company has an Earnings ESP of 0.00% and carries a Zacks Rank #2. 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.

Costco (COST - Free Report) currently has an Earnings ESP of +1.58% and carries a Zacks Rank #2. The Zacks Consensus Estimate for second-quarter fiscal 2024 earnings per share is pegged at $3.60, up 9.1% year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $59.2 billion, which indicates an increase of 7.1% from the figure reported in the prior-year quarter. COST has a trailing four-quarter earnings surprise of 2.6%, on average.

Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +3.51% and a Zacks Rank of 2.

PLAY’s earnings for the quarter under review are expected to increase 42.5%. It reported better-than-expected earnings in three of the trailing four quarters and matched on the remaining one occasion, the average surprise being 34.5%.

Darden Restaurants, Inc. (DRI - Free Report) has an Earnings ESP of +1.11% and a Zacks Rank of 3.

DRI is expected to register 12.8% growth in earnings for the quarter to be reported. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.2%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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