Market Overview

Price Over Earnings Overview: TopBuild

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Looking into the current session, TopBuild Inc. (NYSE: BLD) is trading at $155.40, after a 3.14% decrease. Over the past month, the stock decreased by 12.50%, but over the past year, it actually increased by 42.28%. With questionable short-term performance like this, and great long-term performance, long-term shareholders might want to start looking into the company's price-to-earnings ratio. 

Assuming that all other factors are held constant, this could present itself as an opportunity for shareholders trying to capitalize on the higher share price. The stock is currently below from its 52 week high by 18.97%. 

 

The P/E ratio measures the current share price to the company's earnings per share. It is used by long-term investors to analyze the company’s current performance against its past earnings, historical data and aggregate market data for the industry or the indices, such as S&P 500. A higher P/E indicates that investors expect the company to perform better in the future, and the stock is probably overvalued, but not necessarily. It also shows that investors are willing to pay a higher share price currently, because they expect the company to perform better in the upcoming quarters. This leads investors to also remain optimistic about rising dividends in the future. 

Most often, an industry will prevail in a particular phase of a business cycle, than other industries. 

TopBuild Inc. has a better P/E ratio of 26.08 than the aggregate P/E ratio of 14.83 of the Household Durables industry. Ideally, one might believe that TopBuild Inc. might perform better in the future than it’s industry group, but it’s probable that the stock is overvalued. 

 

Price to earnings ratio is not always a great indicator of the company's performance. Depending on the earnings makeup of a company, investors can become unable to attain key insights from trailing earnings.

 

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Posted-In: P/E Ratio InsightsEarnings News Intraday Update Markets