Builders FirstSource — a company that supplies windows, doors, premade lumber products and other materials for residential homes — is the IBD Stock Of The Day. BLDR stock is consolidating but actionable today.
The setup arrives after Builders FirstSource last week reported second-quarter results that trounced expectations, helped in part by acquisitions and rising commodity prices. The company remained optimistic that it could still turn out solid results even as the housing market slows.
BLDR Stock
Shares of Builders FirstSource rose 2.8% to 70.26 in the stock market today. BLDR stock has a 74.58 handle entry from a consolidation pattern. The handle started on Aug. 1 after an earnings gap-up, with shares then pulling back.
However, investors could buy the stock today, since the stock is bouncing off its 200-day line and breaking a downtrend in the handle.
BLDR stock has a 95 Composite Rating. Its EPS Rating is a best-possible 99. The stock is also on SwingTrader.
Builders FirstSource sells sheet-lumber products, like plywood, used to sheath and frame houses under construction. It also makes doors and windows, and pre-assembles lumber products, like wall panels and roof and floor trusses, that it says allow builders to work more efficiently.
The Dallas-based company also sells an array of other products for homes — from cabinets to roofing to stair parts. Builders FirstSource has operations in 42 states.
'Solid Demand For Housing' Lifts BLDR Stock
Builders FirstSource on Aug. 1 reported Q2 results that were well above Wall Street estimates. The company earned $6.26 per share, up 127% vs. a year earlier and crushing forecasts for $3.07. That was the seventh straight quarter of triple-digit earnings growth. Sales of $6.926 billion beat estimates for $5.53 billion, though the year-over-year gain slowed for a fourth straight quarter to 24%.
"These results were driven by solid demand for housing across our markets, ongoing productivity initiatives and pricing discipline in an improving but still supply-constrained environment," CEO David Flitman said on Builders FirstSource's earnings call.
BLDR stock jumped nearly 8% on the news. The company said that for the full year, it expected acquisitions made within the past 12 months to add sales gains of 6% to 7%. During its earnings call, management said that it had completed 10 acquisitions over the past year and a half.
Builders FirstSource said it expected a slowdown in single-family new-home construction, with an uptick in multifamily homes.
The results came after the Covid-era housing boom led to a spike in demand for lumber and other housing materials, catching sawmills and other suppliers off-guard. Homebuilders reported difficulties securing windows and garage doors. Lumber prices soared then fell.
Homebuilders Lennar and KB Home in June said the housing market had slowed, amid rising home prices and mortgage rates.
'Tremendous Exodus'
However, Peter Jackson, Builders FirstSource's CFO, said on the call that changes to pricing, and reducing fixed contracts, had helped the company stabilize results.
CEO Flitman said that since the last housing-market downturn, there had been a "tremendous exodus of skilled labor in the industry" that would be difficult to recover. Its reserves of premade materials, he said, would become more attractive if the economy slowed further.
"So importantly, those efficiency gains that the builders are gaining from the work we're doing off-site will be important even in a slower market environment because they need those efficiencies, they need to be as productive as they can in a slower operating environment," Flitman said.
