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Builders FirstSource (BLDR) Gains 85.2% YTD: Will the Trend Last?
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Shares of Builders FirstSource, Inc. (BLDR - Free Report) surged 85.2% in the year-to-date period against the Zacks Building Products - Retail industry’s decline of 0.8%. The company is benefiting from accretive acquisitions, attributable to growth in the multi-family value-added product category, along with strategic operational excellence and digital initiatives.
Recently, BLDR reported first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate by 81.6% and 8.3%, respectively.
This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 68.3%, on average. Earnings estimates for 2023 have moved north to $9.28 per share from $7.21 per share over the past 30 days. This depicts analysts' optimism over the company’s growth prospects. Moreover, the company has a strong VGM Score of A, backed by a Value Score of A and a Growth Score of B.
Image Source: Zacks Investment Research
Let us delve deeper into the growth factors.
What is Favoring BLDR?
Acquisitions are an important part of Builders FirstSource’s growth strategy to supplement its organic growth and expand extensively across vast geographic boundaries. The company’s first selective targets are those entities manufacturing prefabricated components such as factory-built roof and floor trusses, wall panels, stairs and engineered wood, as well as other value-added products such as vinyl windows and millwork.
The company has made three successful acquisitions year to date and these helped diversify the portfolio of the company, especially in the multi-family sector. In first-quarter 2023, acquisitions contributed 5.5% to net sales growth. Also, organic sales of the multi-family value-added product category increased 11.5% year over year courtesy of the accretive acquisitions.
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. In the first quarter of 2023, the company delivered $34 million in product savings attributed to improved procurement and SG&A efficiencies. The company expects to deliver more than $90-$110 million in productivity savings in 2023. This reflects efficiency, efficient capacity utilization, ongoing optimization of its footprint and balancing the need for variable cost reductions with its future capacity.
BLDR also remains focused on investing in innovations and enhancing digital solutions for its customers. The company has been deploying Paradigm Estimate and rolling out across its operations to provide faster and more accurate customer quotes. In the first quarter of 2023, the company completed 6,217 automated window and lumber take-off estimates from customer plans on its Paradigm technology. The company is increasing its investment to support technology and automation that will deliver operational excellence and higher volume of sales.
Other Key Picks
Here are some other top-ranked stocks from the Zacks Retail-Wholesale sector.
Chipotle Mexican Grill, Inc. (CMG - Free Report) sports a Zacks Rank #1 (Strong Buy). CMG has a long-term earnings growth rate of 31.8%. The shares of the company have risen 51.5% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CMG’s 2023 sales and EPS suggests growth of 14% and 33.9%, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2. CHUY has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of the company have increased 31.1% in the year-to-date period.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS suggests growth of 10.1% and 23.4%, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2. ARCO has a long-term earnings growth rate of 9.5%. Shares of the company have gained 7.6% in the year-to-date period.
The Zacks Consensus Estimate for ARCO’s 2023 sales and EPS suggests growth of 13.4% and 4.4%, respectively, from the year-ago period’s levels.
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Builders FirstSource (BLDR) Gains 85.2% YTD: Will the Trend Last?
Shares of Builders FirstSource, Inc. (BLDR - Free Report) surged 85.2% in the year-to-date period against the Zacks Building Products - Retail industry’s decline of 0.8%. The company is benefiting from accretive acquisitions, attributable to growth in the multi-family value-added product category, along with strategic operational excellence and digital initiatives.
Recently, BLDR reported first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate by 81.6% and 8.3%, respectively.
This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 68.3%, on average. Earnings estimates for 2023 have moved north to $9.28 per share from $7.21 per share over the past 30 days. This depicts analysts' optimism over the company’s growth prospects. Moreover, the company has a strong VGM Score of A, backed by a Value Score of A and a Growth Score of B.
Image Source: Zacks Investment Research
Let us delve deeper into the growth factors.
What is Favoring BLDR?
Acquisitions are an important part of Builders FirstSource’s growth strategy to supplement its organic growth and expand extensively across vast geographic boundaries. The company’s first selective targets are those entities manufacturing prefabricated components such as factory-built roof and floor trusses, wall panels, stairs and engineered wood, as well as other value-added products such as vinyl windows and millwork.
The company has made three successful acquisitions year to date and these helped diversify the portfolio of the company, especially in the multi-family sector. In first-quarter 2023, acquisitions contributed 5.5% to net sales growth. Also, organic sales of the multi-family value-added product category increased 11.5% year over year courtesy of the accretive acquisitions.
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. In the first quarter of 2023, the company delivered $34 million in product savings attributed to improved procurement and SG&A efficiencies. The company expects to deliver more than $90-$110 million in productivity savings in 2023. This reflects efficiency, efficient capacity utilization, ongoing optimization of its footprint and balancing the need for variable cost reductions with its future capacity.
BLDR also remains focused on investing in innovations and enhancing digital solutions for its customers. The company has been deploying Paradigm Estimate and rolling out across its operations to provide faster and more accurate customer quotes. In the first quarter of 2023, the company completed 6,217 automated window and lumber take-off estimates from customer plans on its Paradigm technology. The company is increasing its investment to support technology and automation that will deliver operational excellence and higher volume of sales.
Other Key Picks
Here are some other top-ranked stocks from the Zacks Retail-Wholesale sector.
Chipotle Mexican Grill, Inc. (CMG - Free Report) sports a Zacks Rank #1 (Strong Buy). CMG has a long-term earnings growth rate of 31.8%. The shares of the company have risen 51.5% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CMG’s 2023 sales and EPS suggests growth of 14% and 33.9%, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2. CHUY has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of the company have increased 31.1% in the year-to-date period.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS suggests growth of 10.1% and 23.4%, respectively, from the year-ago period’s levels.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2. ARCO has a long-term earnings growth rate of 9.5%. Shares of the company have gained 7.6% in the year-to-date period.
The Zacks Consensus Estimate for ARCO’s 2023 sales and EPS suggests growth of 13.4% and 4.4%, respectively, from the year-ago period’s levels.