TopBuild Corp. Just Beat EPS By 6.6%: Here's What Analysts Think Will Happen Next

As you might know, TopBuild Corp. (NYSE:BLD) recently reported its quarterly numbers. TopBuild reported US$1.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$4.79 beat expectations, being 6.6% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for TopBuild

Taking into account the latest results, the most recent consensus for TopBuild from twelve analysts is for revenues of US$5.49b in 2024. If met, it would imply a reasonable 5.4% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 6.4% to US$21.22. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.50b and earnings per share (EPS) of US$20.65 in 2024. So the consensus seems to have become somewhat more optimistic on TopBuild's earnings potential following these results.

There's been no major changes to the consensus price target of US$466, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic TopBuild analyst has a price target of US$529 per share, while the most pessimistic values it at US$410. This is a very narrow spread of estimates, implying either that TopBuild is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that TopBuild's revenue growth is expected to slow, with the forecast 7.3% annualised growth rate until the end of 2024 being well below the historical 19% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.4% annually. So it's pretty clear that, while TopBuild's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around TopBuild's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$466, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on TopBuild. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for TopBuild going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for TopBuild you should be aware of.

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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.