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Builders FirstSource (BLDR) Stock Up 48% in a Year: Here's Why
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Builders FirstSource, Inc.’s (BLDR - Free Report) shares gained 48% in the past year compared with the Zacks Building Products – Retail industry’s 9.7% increase. It is likely to gain further on the back of strategic acquisitions, focus on innovations and digital solutions for customers, cost synergies and stable liquidity.
Although earnings estimates for 2024 have decreased in the past 30 days, it has a solid earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in the trailing 23 quarters. The company also has a VGM Score of A, supported by both a Value and a Growth Score of A.
Let’s delve deeper into the factors that are making this building materials supplier attractive among investors.
Image Source: Zacks Investment Research
A Look at Q1 Performance: Builders FirstSource generated impressive results in first-quarter 2024 despite the weakening Multi-Family market and weather-related woes. Its net sales topped the Zacks Consensus Estimate and inched up marginally on a year-over-year basis. Earnings beat the consensus mark but declined 10.5% from the year-ago period due to these headwinds.
For 2024, the company expects net sales between $17.5 billion and $18.5 billion, up from $17.1 billion reported in 2023. Acquisitions completed within the last 12 months are projected to contribute 1-1.5% in net sales growth.
Buyout Synergies: Acquisitions are an essential part of Builders FirstSource’s growth strategy to supplement its organic growth and expand extensively across vast geographic boundaries. The company's recent acquisitions have enhanced its value-added offerings and broadened its customer base in attractive markets.
In May, Builders FirstSource acquired Shuterman's Building Materials, which manufactures trusses and distributes building materials in Sioux Falls, located in the South Dakota area. In March, the company acquired Hanson Trust, strengthening its value-added position in Northern California and Nevada. In February, it acquired Quality door and millwork, a leading distributor of millwork doors and windows in Southern Idaho.
Digital Transformation: Builders FirstSource remains focused on utilizing new digital technologies to make homebuilding more efficient and enhance its products and services. The company's myBLDR.com acts as the gateway to the collaborative project management platform, enhancing transparency and engagement in the homebuilding process for both Builders FirstSource and its customers. It integrates Paradigm's modern estimating technology with the 3D Home Configuration model. This empowers the company's customers with greater control over design, cost estimation and the building process, leading to time and cost savings for all parties involved.
In February, the company launched its new BFS digital tool to make the building process faster, more efficient and affordable. Since its launch, the company has generated incremental sales of more than $10 million. The company’s digital strategy remains on track to capture $200 million of incremental digital revenues by the end of 2024 and $1-billion growth opportunity by 2026.
On Track to Achieve Productivity Savings: Builders FirstSource delivered $175 million in productivity savings in 2023 and $123 million in 2022, exceeding its $100 million target. In the first quarter, it generated $40 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 improved procurement and SG&A efficiencies. The company expects to deliver $90-$110 million in productivity savings in 2024.
This reflects efficiency, efficient cap capacity utilization, ongoing optimization of its footprint and balancing the need for variable cost reductions with future capacity. In the long term (through 2026), the company expects solid productivity improvement as it has been working hard to leverage best practices and technology, enabling it to become more efficient and productive in serving customers.
Sufficient Liquidity: As of Mar 31, 2024, Builders FirstSource had liquidity of $2.4 billion, including $1.7 billion in net borrowing available under the revolving credit facility.
The company had cash and cash equivalents of $697.5 million, significantly up from $66.16 million at 2023-end. Although long-term debt was above the 2023-end level, it has sufficient liquidity to meet them in the future.
Zacks Rank & Key Picks
BLDR currently carries a Zacks Rank #4 (Sell).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
WING has a trailing four-quarter earnings surprise of 21.4%, on average. The stock has risen 90.6% in the past year. The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests growth of 27.5% and 36.7%, respectively, from the year-ago period’s levels.
PDD Holdings Inc. (PDD - Free Report) currently sports a Zacks Rank of 1. PDD has a trailing four-quarter earnings surprise of 39.1%, on average. The stock has surged 132.8% in the past year.
The consensus estimate for PDD’s 2024 sales and EPS indicates a 49.8% and a 29.1% rise, respectively, from the year-ago period.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. GPS has a trailing four-quarter earnings surprise of 180.9%, on average. The stock has surged 168.3% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS suggests a decline of 0.3% and 4.2%, respectively, from the year-ago period’s levels.
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Builders FirstSource (BLDR) Stock Up 48% in a Year: Here's Why
Builders FirstSource, Inc.’s (BLDR - Free Report) shares gained 48% in the past year compared with the Zacks Building Products – Retail industry’s 9.7% increase. It is likely to gain further on the back of strategic acquisitions, focus on innovations and digital solutions for customers, cost synergies and stable liquidity.
Although earnings estimates for 2024 have decreased in the past 30 days, it has a solid earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in the trailing 23 quarters. The company also has a VGM Score of A, supported by both a Value and a Growth Score of A.
Let’s delve deeper into the factors that are making this building materials supplier attractive among investors.
Image Source: Zacks Investment Research
A Look at Q1 Performance: Builders FirstSource generated impressive results in first-quarter 2024 despite the weakening Multi-Family market and weather-related woes. Its net sales topped the Zacks Consensus Estimate and inched up marginally on a year-over-year basis. Earnings beat the consensus mark but declined 10.5% from the year-ago period due to these headwinds.
For 2024, the company expects net sales between $17.5 billion and $18.5 billion, up from $17.1 billion reported in 2023. Acquisitions completed within the last 12 months are projected to contribute 1-1.5% in net sales growth.
Buyout Synergies: Acquisitions are an essential part of Builders FirstSource’s growth strategy to supplement its organic growth and expand extensively across vast geographic boundaries. The company's recent acquisitions have enhanced its value-added offerings and broadened its customer base in attractive markets.
In May, Builders FirstSource acquired Shuterman's Building Materials, which manufactures trusses and distributes building materials in Sioux Falls, located in the South Dakota area. In March, the company acquired Hanson Trust, strengthening its value-added position in Northern California and Nevada. In February, it acquired Quality door and millwork, a leading distributor of millwork doors and windows in Southern Idaho.
Digital Transformation: Builders FirstSource remains focused on utilizing new digital technologies to make homebuilding more efficient and enhance its products and services. The company's myBLDR.com acts as the gateway to the collaborative project management platform, enhancing transparency and engagement in the homebuilding process for both Builders FirstSource and its customers. It integrates Paradigm's modern estimating technology with the 3D Home Configuration model. This empowers the company's customers with greater control over design, cost estimation and the building process, leading to time and cost savings for all parties involved.
In February, the company launched its new BFS digital tool to make the building process faster, more efficient and affordable. Since its launch, the company has generated incremental sales of more than $10 million. The company’s digital strategy remains on track to capture $200 million of incremental digital revenues by the end of 2024 and $1-billion growth opportunity by 2026.
On Track to Achieve Productivity Savings: Builders FirstSource delivered $175 million in productivity savings in 2023 and $123 million in 2022, exceeding its $100 million target. In the first quarter, it generated $40 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 improved procurement and SG&A efficiencies. The company expects to deliver $90-$110 million in productivity savings in 2024.
This reflects efficiency, efficient cap capacity utilization, ongoing optimization of its footprint and balancing the need for variable cost reductions with future capacity. In the long term (through 2026), the company expects solid productivity improvement as it has been working hard to leverage best practices and technology, enabling it to become more efficient and productive in serving customers.
Sufficient Liquidity: As of Mar 31, 2024, Builders FirstSource had liquidity of $2.4 billion, including $1.7 billion in net borrowing available under the revolving credit facility.
The company had cash and cash equivalents of $697.5 million, significantly up from $66.16 million at 2023-end. Although long-term debt was above the 2023-end level, it has sufficient liquidity to meet them in the future.
Zacks Rank & Key Picks
BLDR currently carries a Zacks Rank #4 (Sell).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
Wingstop Inc. (WING - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
WING has a trailing four-quarter earnings surprise of 21.4%, on average. The stock has risen 90.6% in the past year. The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests growth of 27.5% and 36.7%, respectively, from the year-ago period’s levels.
PDD Holdings Inc. (PDD - Free Report) currently sports a Zacks Rank of 1. PDD has a trailing four-quarter earnings surprise of 39.1%, on average. The stock has surged 132.8% in the past year.
The consensus estimate for PDD’s 2024 sales and EPS indicates a 49.8% and a 29.1% rise, respectively, from the year-ago period.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. GPS has a trailing four-quarter earnings surprise of 180.9%, on average. The stock has surged 168.3% in the past year.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS suggests a decline of 0.3% and 4.2%, respectively, from the year-ago period’s levels.