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Why Is TopBuild (BLD) Down 3.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for TopBuild (BLD - Free Report) . Shares have lost about 3.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is TopBuild due for a breakout? 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 Corp. reported better-than-expected results for fourth-quarter 2020. Its earnings and revenues not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter, backed by solid revenue growth and margin improvement in both the segments.
Robert Buck, president and chief executive officer of TopBuild, stated, “Looking ahead, housing fundamentals remain robust and our Company should continue to benefit from strong demand for new housing construction. Our focus remains on driving top line growth and improving operational efficiencies throughout the Company.”
Inside the Headlines
TopBuild reported adjusted earnings of $2.15 per share, which surpassed the consensus estimate of $1.90 by 13.2% and grew 45.3% from the prior-year period.
Total net sales of $721.5 million surpassed the consensus mark of $702.9 million by 0.9%. The top line grew 8.9% on a year-over-year basis on the back of increased volume and sales from acquisitions.
Segmental Performance
For the fourth quarter, Installation (TruTeam) revenues increased 6.9% year over year to $508.8 million. Acquisitions and selling price added 4.5% to revenues. Volumes climbed 2.8% from the prior-year quarter. However, pricing had a 0.3%negative impact on sales. Adjusted operating margin for the quarter expanded 270 bps to 16.1%.
For the quarter, revenues at the Distribution (Service Partners) segment grew 10.5% year over year to $251.5 million driven by 12.7% volume growth, partially offset by a 0.6% lower selling price. Adjusted operating margin improved 210 bps from the year-ago level to 13.4%.
Operating Highlights
Adjusted gross margin of 27.5% expanded 160 bps. Adjusted operating margin improved 280 bps from the year-ago period to 14.4%. The gross margin improvement was driven by operational efficiencies and cost-reduction initiatives, while the operating margin increase was primarily backed by reduced travel and entertainment activity.
Adjusted EBITDA for the fourth quarter grew 31.2% from the year-ago quarter to $92.5 million. Adjusted EBITDA margin improved 280 bps to 16.8% for the quarter.
2020 Highlights
Adjusted earnings for 2020 of $7.28 per share grew 32.6% year over year. Net sales advanced 3.6% from a year ago to $2.72 billion. Adjusted operating margin expanded 200 bps to 13.2%. Adjusted EBITDA margin improved 240 bps to 16.1%. Despite the pandemic-induced challenges, both of its business segments reported revenue growth and solid margin expansion.
Financial Update
As of Dec 31, 2020, cash and cash equivalents were $330 million, up from $184.8 million at 2019-end. The company has $389.6 million of borrowing capacity available under the revolving facility.
At 2020-end, long-term debt came in at $683.4 million compared with $698 million at 2019-end. For 2020, net cash provided by operating activities was $357.9 million compared with $271.8 million a year ago. In 2020, it repurchased 616,227 shares for $49.2 million.
Other Updates
During 2020, TopBuild completed three acquisitions, thereby strengthening footprint in high-growth markets of Texas, Colorado and Tennessee.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, TopBuild has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise TopBuild has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is TopBuild (BLD) Down 3.9% Since Last Earnings Report?
It has been about a month since the last earnings report for TopBuild (BLD - Free Report) . Shares have lost about 3.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is TopBuild due for a breakout? 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's (BLD - Free Report) Q4 Earnings and Revenues Beat Estimates
TopBuild Corp. reported better-than-expected results for fourth-quarter 2020. Its earnings and revenues not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter, backed by solid revenue growth and margin improvement in both the segments.
Robert Buck, president and chief executive officer of TopBuild, stated, “Looking ahead, housing fundamentals remain robust and our Company should continue to benefit from strong demand for new housing construction. Our focus remains on driving top line growth and improving operational efficiencies throughout the Company.”
Inside the Headlines
TopBuild reported adjusted earnings of $2.15 per share, which surpassed the consensus estimate of $1.90 by 13.2% and grew 45.3% from the prior-year period.
Total net sales of $721.5 million surpassed the consensus mark of $702.9 million by 0.9%. The top line grew 8.9% on a year-over-year basis on the back of increased volume and sales from acquisitions.
Segmental Performance
For the fourth quarter, Installation (TruTeam) revenues increased 6.9% year over year to $508.8 million. Acquisitions and selling price added 4.5% to revenues. Volumes climbed 2.8% from the prior-year quarter. However, pricing had a 0.3%negative impact on sales. Adjusted operating margin for the quarter expanded 270 bps to 16.1%.
For the quarter, revenues at the Distribution (Service Partners) segment grew 10.5% year over year to $251.5 million driven by 12.7% volume growth, partially offset by a 0.6% lower selling price. Adjusted operating margin improved 210 bps from the year-ago level to 13.4%.
Operating Highlights
Adjusted gross margin of 27.5% expanded 160 bps. Adjusted operating margin improved 280 bps from the year-ago period to 14.4%. The gross margin improvement was driven by operational efficiencies and cost-reduction initiatives, while the operating margin increase was primarily backed by reduced travel and entertainment activity.
Adjusted EBITDA for the fourth quarter grew 31.2% from the year-ago quarter to $92.5 million. Adjusted EBITDA margin improved 280 bps to 16.8% for the quarter.
2020 Highlights
Adjusted earnings for 2020 of $7.28 per share grew 32.6% year over year. Net sales advanced 3.6% from a year ago to $2.72 billion. Adjusted operating margin expanded 200 bps to 13.2%. Adjusted EBITDA margin improved 240 bps to 16.1%. Despite the pandemic-induced challenges, both of its business segments reported revenue growth and solid margin expansion.
Financial Update
As of Dec 31, 2020, cash and cash equivalents were $330 million, up from $184.8 million at 2019-end. The company has $389.6 million of borrowing capacity available under the revolving facility.
At 2020-end, long-term debt came in at $683.4 million compared with $698 million at 2019-end. For 2020, net cash provided by operating activities was $357.9 million compared with $271.8 million a year ago.
In 2020, it repurchased 616,227 shares for $49.2 million.
Other Updates
During 2020, TopBuild completed three acquisitions, thereby strengthening footprint in high-growth markets of Texas, Colorado and Tennessee.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, TopBuild has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise TopBuild has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.