Overearning Short Candidates: Builders FirstSource, IBM, Forward Air Co, Deere & Co.

Overearning Short Candidates, CF Industries, Photronics, LSB Industries, Builders FirstSource

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

<ul>
<li>Acquisitions and product price increases amid home-buying demand drove a dramatic increase in sales.  Product shortages and operating leverage enabled the company to push EBITDA margins 1000bps. </li>
<li>The macro environment for homebuilding is inflecting.  GDP posted a down since 2014.  Consumer sentiment is collapsing from the surge in inflation, political acrimony, crime and the war in Ukraine.  </li>
<li>The stock is expensive on normalized margins.  After a dramatic run, the stock trades at high multiples of normalized earnings, but deceptively moderate multiples on inflated earnings.</li>
</ul>


Acquisitions and product price increases amid home-buying demand drove a dramatic increase in sales.  Product shortages and operating leverage enabled the company to push EBITDA margins 1000bps. 
The macro environment for homebuilding is inflecting.  GDP posted a down since 2014.  Consumer sentiment is collapsing from the surge in inflation, political acrimony, crime and the war in Ukraine.  
The stock is expensive on normalized margins.  After a dramatic run, the stock trades at high multiples of normalized earnings, but deceptively moderate multiples on inflated earnings.


Short Builders FirstSource (BLDR) On Overearning and Housing Downturn Thesis

Builders Firstsource

Short Builders FirstSource (BLDR) On Overearning and Housing Downturn Thesis