What Happened?
Shares of building materials company Builders FirstSource (NYSE: BLDR) jumped 2.6% in the afternoon session after the company reported decent third-quarter results that beat analyst estimates but also revealed a significant drop in year-over-year profit.
Builders FirstSource announced third-quarter earnings per share of $1.88 on revenue of $3.94 billion, surpassing consensus estimates of $1.58 and $3.84 billion, respectively. However, a deeper look showed that net income fell 57% compared to the same period in the previous year. This drop was mainly due to lower gross profit and higher expenses. The company's net profit margin also declined to 4.7% from 8.2% a year ago. Analyst reactions were divided following the report. Benchmark maintained a 'Buy' rating and raised its price target to $142.00 from $138.00. In contrast, BMO Capital Markets reduced its price objective on the stock to $123.00 from $130.00.
After the initial pop the shares cooled down to $114.33, up 2.3% from previous close.
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What Is The Market Telling Us
Builders FirstSource’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock dropped 6.4% on the news that concerns about the health of the U.S. economy grew following a significant downward revision of job market data.
The Labor Department reported that employers added 911,000 fewer jobs from April 2024 through March than initially estimated. These "benchmark revisions" are issued annually to more accurately account for new and defunct businesses. The report detailed that the leisure and hospitality sector added 176,000 fewer jobs, professional and business services 158,000 fewer, and retailers 126,000 fewer. This weaker-than-expected data has fueled investor anxiety, as it suggests businesses may be becoming more reluctant to hire amid economic uncertainty. The numbers issued are preliminary, with final revisions scheduled for February 2026. JPMorgan Chase CEO Jamie Dimon added that the U.S. economy is "weakening," though he stopped short of predicting a recession. "Whether it's on the way to recession or just weakening, I don't know," he said. Dimon's remarks are closely watched, given his influence as head of one of the nation's largest banks.
Builders FirstSource is down 19.5% since the beginning of the year, and at $114.33 per share, it is trading 39.5% below its 52-week high of $189.03 from November 2024. Investors who bought $1,000 worth of Builders FirstSource’s shares 5 years ago would now be looking at an investment worth $3,499.
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