Value
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.6 |
| P/S | 8.9 |
| EV/EBITDA | 3.5 |
| Fwd P/E | 6.6 |
| PEG | 6.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 19.5x
- ▸PEG: 1.12
BLD · Why this verdict
Why TopBuild (BLD) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
TopBuild has delivered earnings beats in 3 of the last 4 reported quarters, but the stock has reached its analyst consensus target with essentially zero remaining potential return, and the options market is positioned defensively with a put/call ratio of 1.67. An upward analyst target revision following continued earnings execution is the key unlock for the thesis to improve.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Three beats in the last four reported quarters — including a recent beat of $3.75 versus a $3.64 estimate — shows the business has been delivering results modestly ahead of street expectations across varying market conditions. Catalyst breakdown | The beat streak extends through the next two reported quarters with positive earnings surprises above 2%. | →Stable |
| CounterEarnings estimates are currently trending down; if that trend reflects a genuine slowdown in the construction end market, future beats become harder to sustain as the base of expectations adjusts lower. | ||
The stock has reached its analyst consensus target with essentially no remaining potential return to the take-profit level, which means the current setup offers no asymmetry and the thesis requires an upward target revision to justify adding exposure. Warnings | Analyst consensus target is raised above $470 following strong quarterly execution, creating more than 14% potential upside from the current price. | →Stable |
| CounterAnalyst targets are revised upward when fundamentals surprise positively; if earnings continue to beat, the target can be raised promptly, retroactively validating the current price level. | ||
A put/call ratio of 1.67 indicates the options market is positioned meaningfully more defensively than neutral, suggesting institutional participants are hedging against or betting on near-term weakness in the stock. Risk breakdown | The put/call ratio normalizes below 1.0 over the next two months, signaling a reduction in the defensive options posture. | →Stable |
| CounterElevated put buying can reflect rational portfolio hedging in a high-beta, construction-exposed name rather than directional bearish conviction; the ratio can compress quickly on positive earnings news. | ||
Free cash flow is converting at 79% of net income — below full conversion — meaning some reported earnings are not yet translating to cash, which modestly reduces the quality of the earnings multiple being paid at current prices. Quality breakdown | FCF-to-net-income conversion improves to above 90% for 2 consecutive reported quarters, indicating tighter alignment between accounting income and cash generation. | →Stable |
| CounterA Piotroski F-Score of 7 out of 9 indicates the broader financial picture remains sound; 79% conversion, while below full, is not alarming and may reflect normal working capital timing in a construction-services business. | ||
Three beats in the last four reported quarters — including a recent beat of $3.75 versus a $3.64 estimate — shows the business has been delivering results modestly ahead of street expectations across varying market conditions.
→StableCatalyst breakdown
- Expectation
- The beat streak extends through the next two reported quarters with positive earnings surprises above 2%.
CounterEarnings estimates are currently trending down; if that trend reflects a genuine slowdown in the construction end market, future beats become harder to sustain as the base of expectations adjusts lower.
The stock has reached its analyst consensus target with essentially no remaining potential return to the take-profit level, which means the current setup offers no asymmetry and the thesis requires an upward target revision to justify adding exposure.
→StableWarnings
- Expectation
- Analyst consensus target is raised above $470 following strong quarterly execution, creating more than 14% potential upside from the current price.
CounterAnalyst targets are revised upward when fundamentals surprise positively; if earnings continue to beat, the target can be raised promptly, retroactively validating the current price level.
A put/call ratio of 1.67 indicates the options market is positioned meaningfully more defensively than neutral, suggesting institutional participants are hedging against or betting on near-term weakness in the stock.
→StableRisk breakdown
- Expectation
- The put/call ratio normalizes below 1.0 over the next two months, signaling a reduction in the defensive options posture.
CounterElevated put buying can reflect rational portfolio hedging in a high-beta, construction-exposed name rather than directional bearish conviction; the ratio can compress quickly on positive earnings news.
Free cash flow is converting at 79% of net income — below full conversion — meaning some reported earnings are not yet translating to cash, which modestly reduces the quality of the earnings multiple being paid at current prices.
→StableQuality breakdown
- Expectation
- FCF-to-net-income conversion improves to above 90% for 2 consecutive reported quarters, indicating tighter alignment between accounting income and cash generation.
CounterA Piotroski F-Score of 7 out of 9 indicates the broader financial picture remains sound; 79% conversion, while below full, is not alarming and may reflect normal working capital timing in a construction-services business.
Per-dimension breakdown
Quality
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.4 |
| ROA | 6.1 |
| Gross margin | 1.8 |
| Op margin | 4.9 |
| Net margin | 4.5 |
| Current ratio | 7.0 |
| FCF quality | 5.9 |
| Moat | 6.0 |
| Piotroski F | 7.8 |
- ▸Earnings quality warning: 79% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.8 |
| EPS growth | 5.5 |
Momentum
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.5 |
| Volume | 8.1 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 2.5 |
| Analyst rating | 6.9 |
| Price target | 6.9 |
- ▸LLM news sentiment: -0.50 (n=2)
- ▸Light analyst coverage (9.0) — signal dampened
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.1 |
| quality rank | 6.3 |
| growth rank | 5.0 |
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.4 |
| support resistance | 3.1 |
| 52w position | 4.9 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.7 |
| days to cover | 8.3 |
| volatility | 5.4 |
| put call | 9.6 |
| implied vol | 0.0 |
| beta | 4.0 |
| debt equity | 4.4 |
- ▸High IV: 187%
Catalyst
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 2.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.4 |
| news activity | 6.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:7.4>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:40d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.2=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=7.4>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.22
Upside
-1.4%
Downside
6.1%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 53
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.81>1.3
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.22 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.4, Growth at 6.2, and Value at 5.8; the weakest are Technical at 3.8, Peer rank at 4.4, and Catalyst at 4.7. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.22 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Three beats in the last four reported quarters — including a recent beat of $3.75 versus a $3.64 estimate — shows the business has been delivering results modestly ahead of street expectations across varying market conditions.
Trip ifEPS surprise falls below 0% for 2 consecutive reported quarters.
- P2The stock has reached its analyst consensus target with essentially no remaining potential return to the take-profit level, which means the current setup offers no asymmetry and the thesis requires an upward target revision to justify adding exposure.
Trip ifAnalyst consensus target rises above $470, restoring more than 14% potential upside from the current price of $412.04.
- P3A put/call ratio of 1.67 indicates the options market is positioned meaningfully more defensively than neutral, suggesting institutional participants are hedging against or betting on near-term weakness in the stock.
Trip ifPut/call ratio falls below 1.0 for 4 or more consecutive weeks.
- P4Free cash flow is converting at 79% of net income — below full conversion — meaning some reported earnings are not yet translating to cash, which modestly reduces the quality of the earnings multiple being paid at current prices.
Trip ifFCF-to-net-income conversion rises above 90% for 2 consecutive reported quarters.