Builders FirstSource, Inc. (BLDR) shares are currently printing a large uptick, gaining 58% from the previous close, after the building materials company announced it will acquire privately-held lumber supplier ProBuild for $1.63 billion in cash. The deal, which is expected to be immediately accretive to BLDR’s earnings, will close sometime in the second half of fiscal 2015.
“We are very pleased to announce this compelling combination with ProBuild to create a more diversified company with enhanced scale and an improved geographic footprint that will drive significant value for our customers and stockholders,” Builders FirstSource CEO Floyd Sherman said in a statement. “As the U.S. housing market continues its recovery, we believe now is the ideal time to position Builders FirstSource for its next phase of growth and value creation.”
Builders’s trading volume jumped on the news with the issue currently trading more than 6.4 million shares, which dwarfs the 3-month average volume of 203K shares.
On valuation measures, Builders FirstSource, Inc. shares are currently priced at 62.10x this year’s forecasted earnings compared to the industry’s 19.75x earnings multiple. Ticker has a PEG and forward P/E ratio of 0.62 and 19.64, respectively. Price/Sales for the same period is 0.42 while EPS is $0.18. Currently there are 3 analysts that rate BLDR a ‘Buy’, 2 rate it a ‘Hold’. No analyst rates it a ‘Sell’. BLDR has a median Wall Street price target of $8.00 with a high target of $9.00.
In the past 52 weeks, shares of Dallas, Texas-based maker of structural building products for residential new construction in the U.S. have traded between a low of $4.85 and a high of $11.28 and are now at $10.91. Shares are up 29.23% year-over-year and 58.52% year-to-date.