Here’s why – TradingView News

FirstSource Builders, Inc.Shares of BLDR have surged 48% over the past year, compared with a 9.7% gain in the Zacks Building Products – Retail industry. It is likely to continue to benefit from strategic acquisitions, focus on innovation and digital customer solutions, cost synergies and stable liquidity.

Although 2024 earnings estimates have declined over the last 30 days, the company has a long history of surprises. Its earnings have surpassed the Zacks Consensus Estimate over the trailing 23 quarters. The company also has a VGM Rating of A, supported by both a Value and Growth Rating of A.

Let’s take a closer look at the factors that make this supplier of building materials attractive to investors.

A look at first quarter performance: Builders FirstSource generated impressive first-quarter 2024 results despite a weakening multifamily market and weather concerns. Its net sales surpassed the Zacks Consensus Estimate and increased slightly year-over-year. Profits exceeded consensus but were down 10.5% from the year-ago period due to these unfavorable conditions.

For 2024, the company expects net sales of $17.5 billion to $18.5 billion, up from $17.1 billion reported in 2023. Acquisitions completed over the last 12 months are expected to contribute 1-1.5% to net sales growth.

Buyout synergies: Acquisitions are an important part of Builders FirstSource’s growth strategy to complement its organic growth and aggressive expansion across extensive geographic boundaries. The company’s recent acquisitions have enhanced its value-added offerings and expanded its customer base in attractive markets.

In May, Builders FirstSource acquired Shuterman’s Building Materials, a truss manufacturer and construction materials distributor in Sioux Falls, South Dakota. 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 milled doors and windows in southern Idaho.

Digital transformation: Builders FirstSource continues to focus on leveraging new digital technologies to increase home building efficiency and improve its products and services. The company’s myBLDR.com website acts as a gateway to the collaborative project management platform, increasing transparency and engagement in the home building process for both Builders FirstSource and its clients. Integrates Paradigm’s modern estimating technology with a 3D home configuration model. This gives the company’s clients greater control over the design, cost estimating and construction process, leading to time and cost savings for all parties involved.

In February, the company launched a new digital BFS tool that makes the construction process faster, more efficient and cheaper. Since its inception, the company has generated over $10 million in incremental sales. The company’s digital strategy remains on track to achieve $200 million in incremental digital revenue by the end of 2024 and a $1 billion growth opportunity by 2026.

We are well on our way to achieving productivity savings: Builders FirstSource delivered productivity savings of $175 million in 2023 and $123 million in 2022, exceeding the $100 million target. The company generated $40 million in productivity savings in the first quarter. The advantages of this solution were improvements in various projects and the use of the BFS One Team operating system. The successful use of the BFS One Team operating system improved the efficiency of purchasing and selling, general and administrative costs. The company expects to achieve productivity savings of $90-110 million in 2024.

This reflects efficiency, efficient capacity utilization, continuous coverage optimization and balancing the need to reduce variable costs with future performance. In the long term (through 2026), the company expects to significantly improve productivity as it works hard to leverage best practices and technology so it can become more efficient and productive in serving customers.

Sufficient liquidity: As of March 31, 2024, Builders FirstSource had $2.4 billion in liquidity, including $1.7 billion of net debt available under its revolving credit facility.

The company had cash and cash equivalents of $697.5 million, a significant increase from $66.16 million at the end of 2023. While long-term debt was above its level at the end of 2023, it has sufficient liquidity to cover it in the future.

Zacks Rank and Key Picks

BLDR is currently sporting a Zacks Rank of 4 (Sell).

Here are some better-ranked stocks from the Zacks Retail and Wholesale sector.

Wingstop Inc. WING is currently sporting a Zacks Rank of #1 (Strong Buy). You can see Find the complete list of Zacks Rank #1 stocks here.

WING surprises with results for the last four quarters, averaging 21.4%. Over the past year, the company’s shares have increased by 90.6%. The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests growth of 27.5% and 36.7%, respectively, from year-ago levels.

PDD Holdings Inc. PDD currently has a Zacks Rank of 1. PDD has an average trailing four-quarter earnings surprise of 39.1%. The company’s shares have increased by 132.8% in the last year.

Consensus estimates for PDD’s 2024 sales and EPS indicate growth of 49.8% and 29.1%, respectively, compared to the year-ago period.

Gap limited liability company GPS currently has a Zacks Rank of 1. GPS’s trailing four-quarter earnings return has averaged 180.9%. Over the past year, the company’s stock has increased by 168.3%.

The Zacks Consensus Estimate for GPS’s fiscal 2024 sales and EPS suggests declines of 0.3% and 4.2%, respectively, from year-ago levels.

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