TopBuild Corp (NYSE: BLD)

Sector: Industrials Industry: Engineering & Construction CIK: 0001633931
Market Cap 13.35 Bn
P/B 6.01
P/E 23.52
P/S 2.55
ROIC (Qtr) 12.99
Div Yield % 0.00
Rev 1y % (Qtr) 1.45
Total Debt (Qtr) 3.09 Bn
Debt/Equity (Qtr) 1.39

About

TopBuild Corp, known by its ticker symbol BLD, is a prominent player in the construction industry of the United States and Canada. The company operates in two primary segments: Installation and Specialty Distribution. The Installation segment is a nationwide provider of insulation installation services, with approximately 240 branches spread across the United States. This segment's offerings extend beyond insulation, encompassing the installation of glass and windows, rain gutters, garage doors, closet shelving, and fireplaces. The installed products...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 1.14B provide 8.40x coverage of short-term debt 135.97M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 845.82M provides exceptional 10.21x coverage of interest expenses 82.84M, showing strong debt service capability.
  • Operating cash flow of 845.82M provides strong 48.91x coverage of stock compensation 17.30M, indicating sustainable incentive practices.
  • Robust free cash flow of 792.44M exceeds capital expenditure of 53.38M by 14.85x, indicating strong organic growth funding capability.
  • Operating cash flow of 845.82M fully covers other non-current liabilities 391.89M by 2.16x, showing strong long-term stability.

Bear case

  • Operating cash flow of 845.82M barely covers its investment activities of (952.87M), with a coverage ratio of -0.89, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 1.14B provide limited coverage of acquisition spending of (899.49M), which is -1.27x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 874.31M relative to inventory of 385.64M (2.27 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Retained earnings of 3.41B provide limited buffer against comprehensive income items of (22.99M), which is -148.36x, indicating elevated exposure to market risks.
  • Operating cash flow of 845.82M is outpaced by equity issuance of (461.54M) (-1.83 ratio), indicating concerning reliance on equity markets for funding operations.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Engineering & Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PWR Quanta Services, Inc. 62.71 Bn 61.60 2.31 6.02 Bn
2 FER Ferrovial SE 48.08 Bn 14.25 5.05 -
3 FIX Comfort Systems Usa Inc 35.76 Bn 42.69 4.30 0.39 Bn
4 EME EMCOR Group, Inc. 29.29 Bn 25.91 1.80 0.42 Bn
5 APG APi Group Corp 17.37 Bn 111.36 2.27 3.05 Bn
6 MTZ Mastec Inc 17.01 Bn 51.39 1.24 2.77 Bn
7 J Jacobs Solutions Inc. 16.94 Bn 58.56 1.41 2.71 Bn
8 BLD TopBuild Corp 13.35 Bn 23.52 2.55 3.09 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.28 1.61
EV to Cash from Ops. EV/CFO 17.25 6.94
EV to Debt EV to Debt 4.73 11.81
EV to EBIT EV/EBIT 17.26 17.80
EV to EBITDA EV/EBITDA 14.90 13.77
EV to Free Cash Flow [EV/FCF] EV/FCF 18.42 55.77
EV to Market Cap EV to Market Cap 1.09 1.20
EV to Revenue EV/Rev 2.79 1.65
Price to Book Value [P/B] P/B 6.01 5.81
Price to Earnings [P/E] P/E 23.52 35.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 25.81
Dividend per Basic Share Div per Share (Qtr) 0.00 0.24
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.05
Interest Coverage Int. cover (Qtr) 10.21 80.15
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 23.82 -166.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 343.92 637.72
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 5.87
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -6.64 92.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -3.32 8.04
EBIT Growth (1y) % EBIT 1y % (Qtr) -6.81 85.34
EBT Growth (1y) % EBT 1y % (Qtr) -8.36 42.07
EPS Growth (1y) % EPS 1y % (Qtr) -0.70 43.76
FCF Growth (1y) % FCF 1y % (Qtr) 13.10 -20.95
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -4.16 32.46
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.82 1.14
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.05
Cash Ratio Cash Ratio (Qtr) 1.36 0.38
Current Ratio Curr Ratio (Qtr) 2.90 1.55
Debt to Equity Ratio Debt/Equity (Qtr) 1.39 0.89
Interest Cover Ratio Int Coverage (Qtr) 10.21 80.15
Times Interest Earned Times Interest Earned (Qtr) 10.21 80.15
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.00 0.40
EBIT Margin % EBIT Margin % (Qtr) 16.15 -2.31
EBT Margin % EBT Margin % (Qtr) 14.57 -4.59
Gross Margin % Gross Margin % (Qtr) 29.70 20.38
Net Profit Margin % Net Margin % (Qtr) 10.80 -5.96