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TopBuild (BLD) Up 9.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for TopBuild (BLD - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TopBuild due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

TopBuild (BLD - Free Report) Q4 Earnings & Net Sales Beat, Margins Up

TopBuild Corp. reported impressive results for fourth-quarter 2023. Its earnings and revenues surpassed the Zacks Consensus Estimate and improved year over year.

The 2023 performance of the company demonstrates a consistent enhancement and profitable expansion, notably in the commercial and industrial sectors. These sectors experienced 4.9% growth in the fourth quarter and 6.2% growth throughout 2023. President and CEO Robert Buck conveyed contentment regarding the company's adeptness in enhancing operational efficiencies and elevating sales and labor productivity. These efforts significantly bolstered revenue growth and margin expansion.

Inside the Headlines

The company’s adjusted earnings per share (EPS) of $4.69 topped the consensus estimate of $4.60 by 2%. The bottom line increased 6.6% from the prior year’s $4.40.

Total net sales of $1.29 billion beat the consensus mark of $1.28 billion by 0.2% and increased 1.7% year over year. However, total net sales on a same-branch basis declined 1% year over year.

Segmental Performance

Installation (TruTeam) sales increased 3.8% year over year to $790.4 million. Acquisitions and selling prices contributed 5.1% and 2.4% to sales, respectively. However, volumes reduced sales by 3% year over year. Our model suggested the segment’s net sales to grow 4% to $791.4 million. Although single-family volume experienced a decline, this was outweighed by acquisitions, increased multi-family and commercial volume, and a slight uptick in prices.

Adjusted operating margin for the quarter expanded 30 basis points (bps) to 19%. Adjusted EBITDA margin improved 60 bps to 21.4% for the quarter.

Revenues of the Specialty Distribution (Service Partners) segment grew 0.2% year over year to $564.5 million. Volumes reduced sales year over year by 0.2%. However, pricing contributed 0.5% to sales growth. We expected segmental net sales to decline 1.1% to $557.1 million. The decrease in residential volumes was surpassed by robust commercial and industrial volumes, along with pricing strength.

Adjusted operating margin rose 50 bps from the year-ago level to 14.8%. Adjusted EBITDA margin also improved 80 bps to 17.5% for the quarter.

Operating Highlights

Adjusted gross margin of 30.4% expanded 70 bps on operational efficiencies and strong margins on Installations of multi-family and commercial projects.

Adjusted SG&A expenses, as a percentage of revenues, grew 40 bps year over year at 13.9%.

Nonetheless, adjusted operating margin expanded 30 bps from the year-ago period to 16.5%. We anticipated the metric to be 15.8% for the reported quarter.

Adjusted EBITDA grew 6% from the year-ago quarter to $251.6 million.

Adjusted EBITDA margin improved 80 bps to 19.6% for the quarter. The Zacks model suggested the metric to be 18.7% for the quarter under discussion.

2023 Highlights

Adjusted EPS was $19.73, reflecting an increase of 15.3% from the 2022 level. Net sales of $5.19 billion increased 3.7% from 2022. Adjusted operating margin expanded 120 bps to 17.3%. Adjusted EBITDA margin grew 140 bps year over year to 20.2%.

Financial Update

As of Dec 31, 2023, cash and cash equivalents were $848.6 million, up from $240 million at 2022-end. Long-term debt was $1.37 billion, down from $1.42 billion at 2022-end.

For 2023, net cash provided by operating activities was $849.4 million, up from $495.8 million in the year-ago period.

2024 Guidance

TopBuild expects net sales between $5.360 and $5.560 billion. The estimated figure indicates an increase from $5.19 billion reported in 2023.

Adjusted EBITDA is now projected to be between $1.04 billion and $1.13 billion. This suggests growth (considering the midpoint of the guided range) from $1.05 billion reported in 2023.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, TopBuild has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TopBuild has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

TopBuild is part of the Zacks Building Products - Miscellaneous industry. Over the past month, Gibraltar Industries (ROCK - Free Report) , a stock from the same industry, has gained 4%. The company reported its results for the quarter ended December 2023 more than a month ago.

Gibraltar Industries reported revenues of $328.81 million in the last reported quarter, representing a year-over-year change of +4.8%. EPS of $0.85 for the same period compares with $0.72 a year ago.

For the current quarter, Gibraltar Industries is expected to post earnings of $0.76 per share, indicating a change of +8.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.9% over the last 30 days.

Gibraltar Industries has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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