EVENTS:   Best Equity Short Ideas Conference Call 12 - Zach Shannon/Corto Capital Advisors & Craig Huber/Huber Research Partners & Thomas Beevers /Forensic Alpha & Ed Steele/Iron Blue Financials & Bill Campbell/Paragon Intel - 12 Nov 25   Will AI Deflate the World? Macro Lessons from Three Industrial Revolutions and China - Manoj Pradhan/Talking Heads Macro - 13 Nov 25     ROADSHOWS: Forest Products Sector Equity and Commodity Research With Expertise in Distressed Debt - Kevin Mason /ERA Research   •   London   12 - 14 Nov 25       Buyside to Buyside Forum and Expert Calls across TMT, Consumer, Healthcare and Fintech - Andrew Peters /Revelare Partners   •   London   17 - 19 Nov 25       Fundamental US Healthcare Short Ideas - Dr Elliot Favus /Favus Institutional Research   •   London   17 - 19 Nov 25      

Fortnightly Publication Highlighting Latest Insights From IRF Providers

Company Research

Building Product Distributors still offer plenty of upside

Industrials

Thompson Research Group

Many market participants are looking for a way to play housing and it would be easy to look at building product distributors and write them off as being overvalued and that you’ve missed out. However, TRG believes this is faulty logic. Builders FirstSource, Beacon Roofing and GMS (as well as others) have margin profiles that have risen to comparable or superior levels in relation to the “premium-valued group” (SiteOne, Pool, Leslie's, Core & Main and Ferguson), but have EV/EBITDA multiples (avg. 10.6x) well below these stocks (avg. >20x). If they gain a more appropriate multiple (for strong SF starts and better margins) on higher EBITDA, then all three companies still offer significant (~70%) upside.

Edition: 183

- 05 April, 2024