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This Zacks Rank #2 (Buy) company is benefiting from accretive acquisitions, effective productivity gains and intent focus on digital investments. Furthermore, increased multi-family housing starts are encouraging for the company’s prospects.
The Zacks Consensus Estimate for the company's 2024 earnings has risen to $14.02 per share from $13.45 in the past 30 days. BLDR delivered a trailing four-quarter earnings surprise of 40.6%, on average.
Image Source: Zacks Investment Research
The growth prospect is further solidified with a VGM Score of A, backed by a Value Score of A and a Growth Score of B. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the continuation of an outperformance in the near term.
Factors That Make the Stock Attractive
Accretive Buyouts Bode Well: Inorganic moves, be it acquisition or divestitures, have been an important part of Builders FirstSource’s growth strategy to supplement its organic growth and extensive expansion across vast geographic boundaries. The primary aim of these strategic moves includes expanding the homebuilding market reach and increasing product offerings.
Considering acquisitions, the company is advancing toward diverse improvements by value-added share growth while expanding through tuck-in acquisitions. BLDR’s recent acquisitions have enhanced its value-added offerings and broadened its customer base in attractive markets. In the fourth quarter and full year 2023, acquisitions contributed 1.6% and 3.6%, respectively, to the net sales of the company. During 2023, the company completed seven acquisitions and expects these to contribute about 1-1.5% to the total net sales growth of 2024.
Productivity Gains: BLDR is gaining from its operational excellence and supply-chain initiatives. These strategic moves are ensuring the company to save from increased productivity and maintain its shareholder value. During 2023, the company delivered $175 million in productivity savings. The upside was backed by improvement across a variety of projects and leveraging its BFS One Team Operating System. The successful utilization of the BFS One Team Operating System contributed toward improved procurement and delivered SG&A efficiencies.
The company now expects to deliver $90-$110 million in productivity savings in 2024. Given the productivity gains, Builders FirstSource expects its base business to witness approximately 9% CAGR on the top line, a 12% adjusted EBITDA CAGR and a 30 basis points per year improvement in adjusted EBITDA margin from 2024 to 2026. Also, adjusted earnings per share (EPS) are likely to have witnessed 17% CAGR in the same period.
Investments in Digital Innovations: Builders FirstSource remains focused on investing in innovations and enhancing digital solutions for its customers. It remains on track to utilize new digital technologies to make homebuilding more efficient and enhance its products and services. The company has been deploying Paradigm Estimate and rolling out across its operations to provide faster and more accurate customer quotes.
Furthermore, the company is standing by its Full Digital product launch of myBLDR.com in the first quarter of 2024 to drive customer adoption through its sales and operations teams. BLDR’s digital strategy remains on track to capture $200 million of incremental digital revenues by the end of 2024 and a $ 1 billion growth opportunity by 2026.
Other Key Picks
Here are some other top-ranked stocks from the Zacks Retail-Wholesale sector.
It has a trailing four-quarter earnings surprise of 32.1%, on average. The stock has surged 108.4% in the past year. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and earnings per share (EPS) suggests an increase of 10.9% and 10.8%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently flaunts a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 212.7%, on average. The stock has increased 32.7% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 4.9% and a 30.7% rise, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) sports a Zacks Rank of 1 at present. It has a trailing four-quarter earnings surprise of 180.9%, on average. The stock has surged 211.7% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS suggests a decline of 0.3% and 4.9%, respectively, from the year-ago period’s levels.
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Here's Why Builders FirstSource (BLDR) Spikes 147% in a Year
Builders FirstSource, Inc.’s (BLDR - Free Report) shares surged 147.3% in the past year, outperforming the Zacks Building Products - Retail industry’s 37% growth.
This Zacks Rank #2 (Buy) company is benefiting from accretive acquisitions, effective productivity gains and intent focus on digital investments. Furthermore, increased multi-family housing starts are encouraging for the company’s prospects.
The Zacks Consensus Estimate for the company's 2024 earnings has risen to $14.02 per share from $13.45 in the past 30 days. BLDR delivered a trailing four-quarter earnings surprise of 40.6%, on average.
Image Source: Zacks Investment Research
The growth prospect is further solidified with a VGM Score of A, backed by a Value Score of A and a Growth Score of B. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the continuation of an outperformance in the near term.
Factors That Make the Stock Attractive
Accretive Buyouts Bode Well: Inorganic moves, be it acquisition or divestitures, have been an important part of Builders FirstSource’s growth strategy to supplement its organic growth and extensive expansion across vast geographic boundaries. The primary aim of these strategic moves includes expanding the homebuilding market reach and increasing product offerings.
Considering acquisitions, the company is advancing toward diverse improvements by value-added share growth while expanding through tuck-in acquisitions. BLDR’s recent acquisitions have enhanced its value-added offerings and broadened its customer base in attractive markets. In the fourth quarter and full year 2023, acquisitions contributed 1.6% and 3.6%, respectively, to the net sales of the company. During 2023, the company completed seven acquisitions and expects these to contribute about 1-1.5% to the total net sales growth of 2024.
Productivity Gains: BLDR is gaining from its operational excellence and supply-chain initiatives. These strategic moves are ensuring the company to save from increased productivity and maintain its shareholder value. During 2023, the company delivered $175 million in productivity savings. The upside was backed by improvement across a variety of projects and leveraging its BFS One Team Operating System. The successful utilization of the BFS One Team Operating System contributed toward improved procurement and delivered SG&A efficiencies.
The company now expects to deliver $90-$110 million in productivity savings in 2024. Given the productivity gains, Builders FirstSource expects its base business to witness approximately 9% CAGR on the top line, a 12% adjusted EBITDA CAGR and a 30 basis points per year improvement in adjusted EBITDA margin from 2024 to 2026. Also, adjusted earnings per share (EPS) are likely to have witnessed 17% CAGR in the same period.
Investments in Digital Innovations: Builders FirstSource remains focused on investing in innovations and enhancing digital solutions for its customers. It remains on track to utilize new digital technologies to make homebuilding more efficient and enhance its products and services. The company has been deploying Paradigm Estimate and rolling out across its operations to provide faster and more accurate customer quotes.
Furthermore, the company is standing by its Full Digital product launch of myBLDR.com in the first quarter of 2024 to drive customer adoption through its sales and operations teams. BLDR’s digital strategy remains on track to capture $200 million of incremental digital revenues by the end of 2024 and a $ 1 billion growth opportunity by 2026.
Other Key Picks
Here are some other top-ranked stocks from the Zacks Retail-Wholesale sector.
Deckers Outdoor Corporation (DECK - Free Report) presentlt 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 32.1%, on average. The stock has surged 108.4% in the past year. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and earnings per share (EPS) suggests an increase of 10.9% and 10.8%, respectively, from the year-ago period’s levels.
Brinker International, Inc. (EAT - Free Report) currently flaunts a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 212.7%, on average. The stock has increased 32.7% in the past year.
The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS indicates a 4.9% and a 30.7% rise, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) sports a Zacks Rank of 1 at present. It has a trailing four-quarter earnings surprise of 180.9%, on average. The stock has surged 211.7% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS suggests a decline of 0.3% and 4.9%, respectively, from the year-ago period’s levels.