Building services and installation company TopBuild (NYSE: BLD) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 13.2% year on year to $1.49 billion. On the other hand, the company’s full-year revenue guidance of $6.08 billion at the midpoint came in 1.4% below analysts’ estimates. Its non-GAAP profit of $4.50 per share was 0.9% below analysts’ consensus estimates.

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Company Overview

Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE: BLD) is a distributor and installer of insulation and other building products.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, TopBuild’s 14.8% annualized revenue growth over the last five years was exceptional. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. TopBuild’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2% over the last two years was well below its five-year trend.

This quarter, TopBuild’s year-on-year revenue growth was 13.2%, and its $1.49 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 13.7% over the next 12 months, an improvement versus the last two years. This projection is healthy and indicates its newer products and services will fuel better top-line performance.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

TopBuild’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 15.7% over the last five years. This profitability was elite for an industrials business thanks to its efficient cost structure and economies of scale. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, TopBuild’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. We like to see margin expansion, but we’re still happy with TopBuild’s performance considering most Home Builders companies saw their margins plummet.

This quarter, TopBuild generated an operating margin profit margin of 12.1%, down 4.5 percentage points year on year. Since TopBuild’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

TopBuild’s EPS grew at an astounding 22.1% compounded annual growth rate over the last five years, higher than its 14.8% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Diving into the nuances of TopBuild’s earnings can give us a better understanding of its performance. A five-year view shows that TopBuild has repurchased its stock, shrinking its share count by 15.2%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For TopBuild, EPS didn’t budge over the last two years, a regression from its five-year trend. We hope it can revert to earnings growth in the coming years.

In Q4, TopBuild reported adjusted EPS of $4.50, down from $5.13 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects TopBuild’s full-year EPS of $19.80 to grow 5.5%.

Key Takeaways from TopBuild’s Q4 Results

We struggled to find many positives in these results. Its full-year EBITDA guidance missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $483 immediately following the results.

TopBuild didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).