Last week, you might have seen that Builders FirstSource, Inc. (NASDAQ:BLDR) released its full-year result to the market. The early response was not positive, with shares down 2.1% to US$26.70 in the past week. Builders FirstSource reported in line with analyst predictions, delivering revenues of US$7.3b and statutory earnings per share of US$1.90, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the latest consensus from Builders FirstSource's eight analysts is for revenues of US$8.01b in 2020, which would reflect a notable 10% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 11% to US$2.13. Before this earnings report, analysts had been forecasting revenues of US$7.77b and earnings per share (EPS) of US$2.17 in 2020. So it looks like there's been no major change in sentiment following the latest results, although analysts have made a modest lift to to revenue forecasts.
The consensus price target increased 7.0% to US$30.45, with an improved revenue forecast carrying the promise of a more valuable business, in time. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Builders FirstSource analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$24.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Builders FirstSource's past performance and to peers in the same market. It's pretty clear that analysts expect Builders FirstSource's revenue growth will slow down substantially, with revenues next year expected to grow 10%, compared to a historical growth rate of 22% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.4% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkBuilders FirstSource will grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Builders FirstSource analysts - going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Builders FirstSource's balance sheet, and whether we think Builders FirstSource is carrying too much debt, for free on our platform here.
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