What: Shares of building products specialist Builders FirstSource (NASDAQ:BLDR) surged 25% today after its quarterly results topped Wall Street expectations.
So what: Builders' shares have soared over the past year on optimism surrounding its acquisition of distributor ProBuild, and strong Q3 results -- adjusted EPS jumped 82% -- only reinforce that positive sentiment. So while pro forma sales for the quarter were essentially flat at $1.7 billion, adjusted EBITDA increased 19% year over year while pro forma gross margins expanded 160 basis points, giving analysts plenty of good vibes over Builders' cost structure and profitability going forward.
Now what: Management continues to expect the ProBuild purchase to generate $100 million-120 million of annualized cost savings. "Since the closing of the ProBuild acquisition on July 31, I am even more confident that this acquisition will drive significant value for our customers and stockholders," said CEO Floyd Sherman. "We have created a more diversified company with enhanced scale and an improved geographic footprint, enabling a broader, more efficient platform of manufacturing and distribution capabilities going forward." Of course, with the stock now up a whopping 175% over its 52-week lows, I'd wait for some of the excitement to fade before buying into that bullishness.
Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.