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TopBuild Corp. (BLD) Hit a 52 Week High, Can the Run Continue?
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Shares of TopBuild (BLD - Free Report) have been strong performers lately, with the stock up 12.3% over the past month. The stock hit a new 52-week high of $414.11 in the previous session. TopBuild has gained 9.9% since the start of the year compared to the 6.1% move for the Zacks Construction sector and the 9.7% 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.
For the current fiscal year, TopBuild is expected to post earnings of $20.77 per share on $5.2 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $22.88 per share on $5.57 billion in revenues. This represents a year-over-year change of 5.63% and 7.16%, 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 has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
TopBuild has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 19.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 19X. On a trailing cash flow basis, the stock currently trades at 19.3X versus its peer group's average of 14.9X. Additionally, the stock has a PEG ratio of 1.99. 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 favorable earnings estimate revisions from covering analysts.
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 meets the list of requirements. 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 Knife River Corporation (KNF - Free Report) . KNF has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Knife River Corporation beat our consensus estimate by 80%, and for the current fiscal year, KNF is expected to post earnings of $3.50 per share on revenue of $2.86 billion.
Shares of Knife River Corporation have gained 9.6% over the past month, and currently trade at a forward P/E of 20.69X and a P/CF of 12.19X.
The Building Products - Miscellaneous industry is in the top 7% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BLD and KNF, even beyond their own solid fundamental situation.
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TopBuild Corp. (BLD) Hit a 52 Week High, Can the Run Continue?
Shares of TopBuild (BLD - Free Report) have been strong performers lately, with the stock up 12.3% over the past month. The stock hit a new 52-week high of $414.11 in the previous session. TopBuild has gained 9.9% since the start of the year compared to the 6.1% move for the Zacks Construction sector and the 9.7% 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.
For the current fiscal year, TopBuild is expected to post earnings of $20.77 per share on $5.2 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $22.88 per share on $5.57 billion in revenues. This represents a year-over-year change of 5.63% and 7.16%, 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 has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
TopBuild has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 19.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 19X. On a trailing cash flow basis, the stock currently trades at 19.3X versus its peer group's average of 14.9X. Additionally, the stock has a PEG ratio of 1.99. 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 favorable earnings estimate revisions from covering analysts.
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 meets the list of requirements. 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 Knife River Corporation (KNF - Free Report) . KNF has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Knife River Corporation beat our consensus estimate by 80%, and for the current fiscal year, KNF is expected to post earnings of $3.50 per share on revenue of $2.86 billion.
Shares of Knife River Corporation have gained 9.6% over the past month, and currently trade at a forward P/E of 20.69X and a P/CF of 12.19X.
The Building Products - Miscellaneous industry is in the top 7% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BLD and KNF, even beyond their own solid fundamental situation.