Should You Investigate TopBuild Corp. (NYSE:BLD) At US$388?

Let's talk about the popular TopBuild Corp. (NYSE:BLD). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$447 and falling to the lows of US$384. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether TopBuild's current trading price of US$388 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at TopBuild’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for TopBuild

What's The Opportunity In TopBuild?

According to our valuation model, TopBuild seems to be fairly priced at around 8.7% below our intrinsic value, which means if you buy TopBuild today, you’d be paying a fair price for it. And if you believe that the stock is really worth $425.47, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since TopBuild’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of TopBuild look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of TopBuild, it is expected to deliver a relatively unexciting earnings growth of 8.7%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for TopBuild, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in BLD’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on BLD, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing TopBuild at this point in time. At Simply Wall St, we found 1 warning sign for TopBuild and we think they deserve your attention.

If you are no longer interested in TopBuild, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com