Key Takeaways
- Builders FirstSource shares jumped 10% after third-quarter adjusted EPS of $1.51 beat the $1.04 consensus.
- Sales still fell 2%, and net debt rose to 4.1x adjusted EBITDA.
- D.R. Horton guided to lower fiscal 2027 revenue, and UFP Industries’ construction margins fell too.
- The next test is the company’s Nov. 17 Investor Day.
Builders FirstSource (BLDR) shares jumped 10% today after its third-quarter profit cleared a bar Wall Street had just lowered.
The same morning, D.R. Horton (DHI), the country’s largest homebuilder, guided lower for fiscal 2027. And UFP Industries (UFPI) reported shrinking construction margins.
The bar was on the floor
On Monday, Loop Capital downgraded the stock to Hold from Buy and cut its target to $62 from $90. That capped a year in which the average target fell from $139 to $68:
Then adjusted EPS of $1.51 beat the $1.04 consensus by 45%, revenue of $3.85 billion topped the $3.75 billion expected, and management kept the midpoints of its 2026 sales and adjusted EBITDA outlook.
Still shrinking
But sales fell 2%, and adjusted EPS was down from $2.00 a year earlier. A $33.6 million tax benefit helped the beat, too. The company’s EBITDA margin roughly halved over the two years to June:
The third-quarter adjusted margin slid to 8.1% from 11.0%. Net debt reached 4.1x adjusted EBITDA, up from 2.3x.
TIKR tracks 24 analysts on Builders FirstSource. How many say “Buy”?
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Builders are pulling back
CEO Peter Jackson said on the third-quarter call that “some builders will likely need to slow starts further to bring inventory in line with sales.”
D.R. Horton guided to $30 billion to $32 billion of fiscal 2027 revenue, after $33 billion in fiscal 2026. It also guided to as few as 79,000 homes closed, against the roughly 84,000 it expected for fiscal 2026 back in July. Fewer homes there means fewer trusses and windows to sell.
UFP Industries’ construction sales rose 11% in its third quarter, but the segment’s adjusted EBITDA margin slipped to 6.8% from 8.4%, which UFP blamed on freight and lumber costs. The reasons are different, but margins are falling at both suppliers.
The bottom isn’t in yet
My take: a 45% beat on a stock that had more than halved in a year earned a relief rally. But sales are still falling and leverage has nearly doubled. I’d want management’s view of 2027 at its Nov. 17 Investor Day before calling a bottom.
Of course, if mortgage rates fall back below 7%, that 4.1x would look a lot less scary in a hurry.
So what is Builders FirstSource stock actually worth?
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