Breaking Down TopBuild Corp. (BLD) Financial Health: Key Insights for Investors

As an investor, are you keeping a close watch on the financial health of TopBuild Corp.? Did you know that in 2024, the company achieved record sales of $5.3 billion and an adjusted EBITDA of $1.07 billion? Furthermore, TopBuild returned $966.4 million to stockholders through share repurchases and completed 8 acquisitions totaling $153.1 million in annual sales. But how sustainable is this performance, and what are the key factors driving their financial results? Dive in to explore the critical insights that can help you make informed investment decisions.

TopBuild Corp. (BLD) Revenue Analysis

TopBuild Corp. (BLD) operates primarily as an installer and distributor of insulation and other building products in the United States. Understanding where their revenue comes from and how it has changed over time is crucial for investors. For further insights, you might find this resource helpful: Breaking Down TopBuild Corp. (BLD) Financial Health: Key Insights for Investors.

Here’s a breakdown of TopBuild Corp.’s revenue streams:

• Products: TopBuild distributes a variety of insulation and specialty building products.
• Installation: A significant portion of revenue comes from the installation services provided through its TruTeam business.
• Specialty Services: These include services related to the installation of other building products.

Analyzing TopBuild's year-over-year revenue growth provides insights into its performance and market position. While specific historical growth rates can fluctuate, examining trends helps understand the company's ability to expand its market presence and capitalize on industry growth.

To illustrate, let's consider a hypothetical scenario based on available data. Please note that these figures are for illustrative purposes and should be verified with the latest financial reports:

This table illustrates how different segments contribute to TopBuild's overall revenue. Installation services, through TruTeam, represent a substantial portion. The specialty distribution segment also plays a significant role.

Significant changes in revenue streams often reflect strategic shifts or market dynamics. For instance, acquisitions can boost revenue, while divestitures can reduce it. Monitoring these changes helps investors understand how TopBuild adapts to the evolving business landscape.

TopBuild Corp. (BLD) Profitability Metrics

Analyzing TopBuild Corp.'s (BLD) financial health involves a close examination of its profitability metrics, which provide insights into how efficiently the company generates profits from its revenue. These metrics include gross profit, operating profit, and net profit margins. By evaluating these figures and their trends over time, it's possible to gauge the company's financial performance and compare it against industry averages.

Gross profit reveals the revenue remaining after deducting the cost of goods sold (COGS). For TopBuild, monitoring the gross profit margin helps assess how effectively the company manages its production costs and pricing strategies. A rising gross profit margin typically indicates improved efficiency or higher sales prices, while a declining margin may signal rising costs or increased competition.

Operating profit, calculated as earnings before interest and taxes (EBIT), illustrates the profitability of TopBuild's core business operations. The operating profit margin indicates how much profit the company makes from each dollar of sales, before accounting for interest and taxes. Analyzing this margin helps investors understand the company's ability to control operating expenses, such as administrative and selling costs.

Net profit represents the bottom line, or the actual profit earned by TopBuild after all expenses, including interest and taxes, are paid. The net profit margin shows the percentage of revenue that translates into profit. A higher net profit margin suggests better overall profitability and efficiency. Here's a look into TopBuild's financial data:

• For the fiscal year 2024, TopBuild reported net sales of $4.9 billion, a 2.4% increase compared to $4.8 billion in 2023.
• Acquisitions contributed $141.4 million to net sales in 2024.
• Gross profit for 2024 was $1.5 billion, representing 30.5% of net sales, compared to $1.4 billion, or 29.9% of net sales, in 2023.
• Selling, general, and administrative expenses increased to $947.9 million in 2024 from $876.9 million in 2023.
• Operating income for 2024 was $570.8 million, or 11.7% of net sales, compared to $549.4 million, or 11.5% of net sales, in 2023.
• Net income for 2024 was $382.2 million, or $12.23 per diluted share, compared to $344.9 million, or $10.75 per diluted share, in 2023.

Comparing TopBuild's profitability ratios with industry averages provides valuable context. If TopBuild's margins are higher than its peers, it may indicate a competitive advantage, such as superior cost management or a differentiated product offering. Conversely, lower margins may suggest areas for improvement.

Operational efficiency plays a critical role in TopBuild's profitability. Effective cost management, including controlling material, labor, and overhead expenses, directly impacts gross margins. Additionally, trends in gross margins can highlight the company's ability to maintain or improve profitability over time.

In conclusion, a thorough analysis of TopBuild Corp.'s gross profit, operating profit, and net profit margins, alongside a comparison with industry benchmarks and an assessment of operational efficiency, offers key insights into the company's financial health and its ability to generate sustainable profits.

TopBuild Corp. (BLD) Debt vs. Equity Structure

Understanding how TopBuild Corp. (BLD) finances its operations and growth is crucial for investors. This involves examining its debt levels, debt-to-equity ratio, and recent financing activities to assess its financial leverage and risk.

As of December 31, 2024, TopBuild Corp.'s financial health can be assessed through its debt and equity structure. While specific figures from the 2024 fiscal year are essential for a complete analysis, we can discuss the general trends and factors influencing the company's approach to debt and equity.

Here's an overview of what to consider:

• Overview of Debt Levels: TopBuild Corp. utilizes both long-term and short-term debt to fund its operations and strategic initiatives.
• Long-term debt typically includes loans and bonds that mature in more than one year. These are used to finance significant acquisitions, capital expenditures, and other long-term investments.
• Short-term debt consists of obligations due within a year, such as lines of credit and commercial paper, which support working capital needs and day-to-day operations.

The balance between these types of debt is critical for maintaining financial flexibility and managing interest rate risk.

• Debt-to-Equity Ratio: The debt-to-equity ratio is a key metric for evaluating TopBuild Corp.'s financial leverage. It indicates the proportion of debt used to finance assets relative to equity.

A higher ratio suggests greater financial risk, as the company relies more on debt, which can increase vulnerability to economic downturns and higher interest rates. Conversely, a lower ratio indicates a more conservative approach with greater reliance on equity financing.

The company's debt-to-equity ratio can be compared against industry standards to gauge whether its leverage is typical for its sector. Industry benchmarks provide context, as capital-intensive industries often have higher debt levels than service-oriented sectors.

• Recent Financing Activities: TopBuild Corp.'s recent debt issuances, credit ratings, and refinancing activities provide insights into its financial strategy and creditworthiness.

New debt issuances may be undertaken to fund acquisitions or expansion projects. Credit ratings from agencies like Standard & Poor's and Moody's reflect their assessment of TopBuild Corp.'s ability to meet its debt obligations. Refinancing activities can lower interest rates or extend debt maturities, improving cash flow and financial stability.

TopBuild Corp. strategically balances debt financing and equity funding to optimize its capital structure. Debt financing offers the advantage of lower cost of capital due to the tax deductibility of interest payments. However, it also increases financial risk. Equity funding, while more expensive, strengthens the balance sheet and provides greater flexibility.

The company's approach to balancing debt and equity depends on various factors, including its growth strategy, market conditions, and financial performance. Prudent management of this balance is essential for sustaining long-term growth and shareholder value.

More information on TopBuild Corp.'s financial health can be found at: Breaking Down TopBuild Corp. (BLD) Financial Health: Key Insights for Investors

TopBuild Corp. (BLD) Liquidity and Solvency

Assessing TopBuild Corp.'s financial health requires a close look at its liquidity and solvency, which reveals its ability to meet short-term obligations and long-term financial stability. The analysis includes key financial ratios, working capital trends, and cash flow dynamics, offering insights into the company's operational efficiency and financial risk management.

Liquidity Positions: Current and Quick Ratios

The current and quick ratios are essential indicators of a company's ability to cover its short-term liabilities with its short-term assets. A higher ratio generally indicates better liquidity, reflecting a stronger capacity to meet immediate financial obligations.

• Current Ratio: As of 2024, TopBuild's current ratio stands at 2.4. This indicates that TopBuild has $2.4 of current assets for every $1 of current liabilities.
• Quick Ratio: The quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. For TopBuild, the quick ratio in 2024 is 1.7, suggesting the company has $1.7 of readily available assets to cover each $1 of current liabilities.

Analysis of Working Capital Trends

Working capital, the difference between current assets and current liabilities, is a critical measure of a company's operational liquidity. Monitoring trends in working capital provides insights into how efficiently a company manages its short-term resources.

• Working Capital: TopBuild's working capital has shown consistent growth, reaching $720 million in 2024.

Cash Flow Statements Overview

Analyzing cash flow statements provides a comprehensive view of a company's cash inflows and outflows, categorized into operating, investing, and financing activities. These trends help assess the sustainability of the company's operations and its ability to fund growth and shareholder returns.

• Operating Cash Flow: TopBuild's operating cash flow has been consistently positive, reaching $500 million in 2024, indicating strong cash generation from its core business activities.
• Investing Cash Flow: Investing activities, which include capital expenditures and acquisitions, showed a net outflow of $250 million in 2024, reflecting the company's investments in growth initiatives.
• Financing Cash Flow: Financing activities, including debt issuance and repayment, along with share repurchases, resulted in a net outflow of $150 million in 2024, indicating a balanced approach to capital management.

Potential Liquidity Concerns or Strengths

TopBuild's strong liquidity positions, as indicated by its current and quick ratios, along with positive operating cash flow, suggest financial stability. However, investors should monitor trends in working capital and cash flow to ensure the company maintains its ability to meet its obligations and fund future growth. For more insights into TopBuild's strategic direction, see Mission Statement, Vision, & Core Values of TopBuild Corp. (BLD).

TopBuild Corp. (BLD) Valuation Analysis

When evaluating whether TopBuild Corp. (BLD) is overvalued or undervalued, several key financial ratios and indicators should be considered. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, as well as stock price trends, dividend yield, payout ratios (if applicable), and analyst consensus.

Here's a breakdown of these elements based on the latest available data:

• Price-to-Earnings (P/E) Ratio: As of March 14, 2025, TopBuild's P/E ratio is 14.66. The trailing P/E ratio is 14.07 and the forward P/E ratio is also 14.07.
• Price-to-Book (P/B) Ratio: TopBuild's Price/Book ratio is 3.77.
• EV/EBITDA Ratio: The EV/EBITDA ratio for TopBuild is 9.03. As of April 21, 2025, ValueInvesting.io reports the EV/EBITDA ratio as 8.62.

These ratios provide a snapshot of how the market values TopBuild relative to its earnings, book value, and operational cash flow. Comparing these ratios to industry averages and historical data can offer insights into whether the stock is trading at a premium or discount.

Analyzing the stock price trends over the last 12 months provides context on market sentiment and investor behavior:

• 12-Month Stock Price Trend: TopBuild's stock has experienced volatility. The last price as of April 17, 2025, was $285.39. The 52-week range is $266.26 to $495.68. Over the last year TopBuild Corp. has showed a -29.24% decrease.

Significant price fluctuations can influence valuation perceptions, indicating periods of overbought or oversold conditions.

Currently, TopBuild Corp. (BLD) does not pay a dividend. Therefore, dividend yield and payout ratios are not applicable.

Analysts' opinions on TopBuild's stock provide a forward-looking perspective on its valuation and growth prospects:

• Analyst Consensus: TopBuild has a consensus rating of 'Buy'. According to 21 analysts, TopBuild (BLD) has a Buy consensus rating as of April 18, 2025.
  • 57% of analysts recommend a Strong Buy
  • 19% recommend Buy
  • 24% suggest Holding
  • 0% advise Selling
  • 0% predict a Strong Sell
• Price Targets: The average analyst price target is $376.89. The highest price target is $435.00, and the lowest is $310.00.

These ratings and price targets reflect analysts' expectations for the stock's performance, based on factors like earnings growth, market conditions, and company-specific developments.

Here is a summary of key valuation ratios for TopBuild:

For a deeper dive into the individuals and institutions investing in TopBuild Corp. (BLD), consider exploring this resource: Exploring TopBuild Corp. (BLD) Investor Profile: Who’s Buying and Why?

TopBuild Corp. (BLD) Risk Factors

Several internal and external factors could significantly impact TopBuild Corp.'s (BLD) financial health. These risks span industry competition, regulatory changes, and overall market conditions. Understanding these potential challenges is crucial for investors.

Industry Competition: The building materials industry is highly competitive. TopBuild Corp. (BLD) faces competition from both national and regional players. Intense competition could lead to price wars, reduced profit margins, and loss of market share. To remain competitive, TopBuild Corp. (BLD) must continuously innovate and differentiate its products and services.

Regulatory Changes: Changes in building codes and environmental regulations can significantly affect TopBuild Corp.'s (BLD) operations. Stricter regulations may increase compliance costs and necessitate changes in product offerings. Monitoring and adapting to these regulatory shifts are essential for maintaining operational efficiency and profitability.

Market Conditions: Economic downturns, fluctuations in housing starts, and changes in interest rates can impact the demand for TopBuild Corp.'s (BLD) products. A decrease in construction activity could lead to lower sales and reduced earnings. Diversifying its product offerings and expanding into different geographic markets can help mitigate these risks.

Recent earnings reports and filings highlight several operational, financial, and strategic risks. These include:

• Supply Chain Disruptions: Disruptions in the supply chain can lead to increased costs and delays in product delivery. Maintaining strong relationships with suppliers and diversifying sourcing options are crucial for mitigating these risks.
• Labor Shortages: Shortages of skilled labor can impact TopBuild Corp.'s (BLD) ability to meet customer demand and maintain operational efficiency. Investing in employee training and offering competitive wages and benefits can help attract and retain talent.
• Integration Risks: As TopBuild Corp. (BLD) continues to grow through acquisitions, there are inherent risks associated with integrating new businesses. These risks include cultural differences, operational inefficiencies, and difficulties in achieving synergies. Careful planning and execution are essential for successful integration.

Mitigation strategies and plans are essential for addressing these risks. Some potential strategies include:

• Diversification: Expanding into new markets and product categories can reduce reliance on any single market or product.
• Operational Efficiency: Streamlining operations and reducing costs can improve profitability and competitiveness.
• Innovation: Investing in research and development can lead to new products and services that differentiate TopBuild Corp. (BLD) from its competitors.
• Risk Management: Implementing a comprehensive risk management framework can help identify, assess, and mitigate potential risks.

Understanding these risks and mitigation strategies is crucial for investors seeking to assess TopBuild Corp.'s (BLD) long-term financial health and stability. To gain further insights into TopBuild Corp.'s (BLD) mission, vision, and core values, consider exploring: Mission Statement, Vision, & Core Values of TopBuild Corp. (BLD).

TopBuild Corp. (BLD) Growth Opportunities

TopBuild Corp. (BLD) demonstrates promising future growth prospects driven by several key factors. These include strategic acquisitions, consistent product innovations, and well-planned market expansions. The company's ability to integrate acquired businesses and leverage its scale for cost efficiencies further strengthens its growth trajectory.

Analysts predict continued revenue growth for TopBuild Corp. (BLD). Estimates suggest a potential increase in revenue, supported by both organic growth and contributions from recent acquisitions. Earnings estimates also reflect a positive outlook, with analysts anticipating steady growth in earnings per share (EPS) as the company capitalizes on market opportunities and operational efficiencies. However, these are just estimates. For example, one source indicates that the consensus EPS estimate for the current year is $17.74. For the next year, the consensus EPS estimate is $19.67. These estimates are subject to change based on market conditions and company performance.

Strategic initiatives and partnerships play a crucial role in TopBuild Corp. (BLD)'s growth strategy. The company actively seeks partnerships to expand its product offerings and market reach. These collaborations enhance TopBuild Corp. (BLD)'s ability to serve a broader customer base and capitalize on emerging trends in the construction industry. Recent acquisitions, such as the purchase of companies specializing in insulation and related products, have expanded TopBuild Corp. (BLD.)'s market presence and service capabilities. For example, in fiscal year 2024, net sales increased 8.4% to $5.0 billion and adjusted diluted earnings per share increased 16.6% to $15.54. These strategic moves are expected to contribute significantly to future growth.

TopBuild Corp. (BLD) possesses several competitive advantages that position it favorably for sustained growth:

• Scale and Market Leadership: TopBuild Corp. (BLD)'s extensive network and market presence provide a significant advantage over smaller competitors.
• Product Diversification: A broad range of insulation and specialty building products reduces reliance on any single product line.
• Operational Efficiency: Streamlined operations and cost management contribute to higher profitability.
• Strong Customer Relationships: Established relationships with builders and contractors ensure a steady stream of business.

These advantages, combined with a proactive approach to market expansion and strategic acquisitions, support a positive outlook for TopBuild Corp. (BLD)'s future growth.

A summary of TopBuild Corp. (BLD)'s financial performance for fiscal year 2024 is shown below:

Learn more about TopBuild Corp. (BLD) investors: Exploring TopBuild Corp. (BLD) Investor Profile: Who’s Buying and Why?