The home improvement market is experiencing a surge, driven by rising disposable income, high interest rates on homes and the desire to improve living spaces. Given this backdrop, fundamentally strong home improvement stocks Builders FirstSource (BLDR), JELD-WEN Holding (JELD), and Snap-on (SNA) could be solid buys this month and beyond. Continue reading….
Due to evolving consumer preferences and growing demand for renovated homes, the home improvement sector is well positioned to remain supported. Therefore, Quality Home Improvement Builders FirstSource, Inc. shares (BLDR), JELD-WEN Holding, Inc. (JELD) and Snap-on Incorporated (SNA) they could be wise additions to the portfolio for February and beyond.
The residential renovation market is growing, driven by changing consumer preferences and increasing disposable income. Disposable personal income has increased of $51.80 billion (0.3%) in December 2023.
The rapid change in consumer demographics, particularly due to millennials and Generation Z populationhas significantly driven demand for home renovations and upgrades.
Furthermore, the increase in domestic interest rates encouraged homeowners to improve and renovate their current homes to meet their long-term needs, boosting sales in the home improvement market.
Additionally, the integration of AI into the industry has improved customer experience and streamlined business operations by reducing friction, eliminating paperwork, and increasing response rates.
According to Statista, home improvement sales in the United States are expected to surpass 600 billion dollars by 2027.
With these favorable trends in mind, let’s take a look at the fundamentals of the three B stocks Home improvement and goods actions, starting from number 3.
Stock no. 3: Manufacturers FirstSource, Inc. (BLDR)
BLDR manufactures and supplies building materials, manufactured components and construction services to professional home builders, subcontractors, remodelers and consumers across the United States
On February 21, BLDR’s Board of Directors authorized the repurchase of up to $1 billion of the company’s outstanding common stock, including approximately $200 million remaining outstanding in the prior stock repurchase plan authorized in the April 2023.
The company repurchased 1.60 million shares of its common stock in the fourth quarter ended December 31, 2023, at an average price of $131.74 per share for $208.90 million, including fees and taxes.
In 2023, the company repurchased 17.80 million shares of common stock at an average price of $100.49 per share for $1.80 billion, including fees and taxes. The company reduced its total shares outstanding by 12.2% in 2023. As of December 31, 2023, there were 121.90 Million shares outstanding.
BLDR is trailing 12 months liquidity deriving from operations of $2.67 billion is 789.7% higher than the industry average of $299.70 million. Its trailing 12-month net profit and leveraged FCF margins of 9.10% and 11.22% are 55.3% and 69.6% higher than industry averages of 5.86% and 6 ,61%, respectively.
For the fiscal fourth quarter ended December 31, 2023, BLDR’s net sales and gross margin stood at $4.15 billion and $1.46 billion, respectively. Additionally, its adjusted EBITDA stood at $685.50 million.
For the same quarter, adjusted net income was $439.30 million, while adjusted net income per share increased 10.6% from the prior-year quarter to $3.55.
Street expects BLDR’s revenue for the fiscal first quarter ending March 2024 to increase 1.4% year-over-year to $3.94 billion. Its EPS is expected to be $2.45 for the same quarter. The company has surpassed consensus EPS estimates in each of the trailing four quarters and consensus revenue estimates in three of the trailing four quarters, which is impressive.
The stock gained 139.8% over the past year to close the latest trading session at $188.37. In the last nine months it has gained 56.8%.
BLDR’s strong outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equivalent to Buy in our proprietary rating system. POWR Ratings are calculated by considering 118 distinct factors, each optimally weighted.
The stock has a grade of B for Momentum and Quality. It is ranked 22nd among 56 B-rated stocks Home improvement and goods industry.
Click here for additional POWR ratings for BLDR (growth, value, stability, and sentiment).
Action no. 2: JELD-WEN Holding, Inc. (JELD)
JELD designs, manufactures and sells wood, metal and composite doors, windows and related building products in North America and Europe.
JELD’s trailing 12-month asset turnover ratio of 1.33x is 65.7% higher than the industry average of 0.80x, while trailing 12-month cash per share of $3.38 is higher than 45.8% compared to the industry average of $2.32.
For the fiscal fourth quarter ended December 31, 2023, JELD’s net revenue and gross margin stood at $1.02 billion and $191.70 million, respectively. Additionally, its adjusted EBITDA from continuing operations increased 10.9% year over year to $86.50 million.
For the same quarter, adjusted net income from continuing operations and adjusted net earnings per share from continuing operations were $31.70 million and $0.37, up 9.7 percent and $0.37, respectively. ‘8.8% compared to the same quarter of the previous year.
Street expects JELD’s EPS for the fiscal year ending December 2024 to rise 8.5% year-over-year to $1.73. Its revenue is expected to be $4.16 billion for the same year. The company beat consensus earnings per share estimates in each of the trailing four quarters and consensus revenue estimates in three of the trailing four quarters.
The stock gained 40.4% over the past year to close the latest trading session at $18.11. In the last nine months it has gained 23.3%.
JELD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
JELD is rated A for Momentum and B for Value. Within the same sector, it is ranked 14th.
In addition to the above, we also evaluated the stock in terms of growth, stability, sentiment and quality. Get all JELD ratings Here.
Stock no. 1: Snap-on Incorporated (SNA)
SNA manufactures and markets tools, equipment, diagnostic and repair information, and system solutions to professional users worldwide. It operates through the Commercial and Industrial Group; Snap Tools Group; Repair and Information Systems Group; and financial services segments.
On February 15, SNA’s board of directors declared a quarterly common stock dividend of $1.86 per share, payable to shareholders on March 11. SNA has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939.
It pays an annual dividend of $7.44 per share, which translates to a dividend yield of 2.76% on the current share price. Its four-year average return is 2.52%. SNA’s dividend payments have grown at a CAGR of 14.6% and 14.5% over the past three and five years, respectively.
On November 1, 2023, SNA acquired Mountz, Inc., a leading developer, manufacturer and distributor of high-precision torque instruments, including measurement, calibration and documentation products, for approximately $40 million in cash.
The acquisition of Mountz complements and expands SNA’s torque offerings to customers in a variety of industries, including aerospace, transportation and advanced manufacturing.
SNA’s trailing 12-month cash per share of $19 is 719.6% higher than the industry average of $2.32. Its trailing 12-month net profit and leveraged FCF margins of 19.79% and 15.45% are 237.8% and 133.5% higher than industry averages of 5.86% and 6 ,61%, respectively.
For the fiscal fourth quarter ended December 30, 2023, SNA’s net sales and gross profit stood at $1.20 billion and $577.60 million, up 3.5% and 3%, respectively. % compared to the previous year quarter. Additionally, its cash and cash equivalents at year-end increased 32.3% year-over-year to $1 billion.
For the same quarter, net income attributable to SNA and net earnings per share attributable to SNA were $255.30 million and $4.75, up 6.9 percent and 7 percent, respectively. 5% compared to the same quarter of the previous year.
Street expects SNA’s revenue for the fiscal first quarter ending March 2024 to increase 1.2% year-over-year to $1.20 billion, and its EPS is expected to increase marginally year-over-year to 4.64 dollars. The company beat consensus earnings per share estimates in each of the trailing four quarters and consensus revenue estimates in three of the trailing four quarters.
The stock has gained 11.1% over the past year to close the latest trading session at $271.23. In the last nine months it has gained 3.8%.
SNA’s POWR ratings reflect its positive outlook. The stock has an overall rating of B, equivalent to Buy in our proprietary rating system.
SNA has an A grade for quality and a B for stability. In the same sector it is in 10th place.
To view additional POWR ratings for growth, value, momentum and sentiment for SNA, Click here.
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BLDR shares were unchanged in premarket trading Friday. Year to date, BLDR has gained 12.84%, compared to a 6.77% gain in the benchmark S&P 500 index over the same period.
About the author: Neha Panjwani
Since her school days, Neha had a deep fascination for finance, a passion that drove her towards a career as an investment analyst after completing her bachelor’s degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her understanding of investment fundamentals. Neha’s primary focus is to help retail investors identify optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a focus on stocks and ETFs. She is committed to empowering people to make informed and strategic investment decisions in the dynamic world of finance.
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