Building services and installation company TopBuild (NYSE: BLD) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 5% year on year to $1.30 billion. The company’s full-year revenue guidance of $5.25 billion at the midpoint came in 0.9% above analysts’ estimates. Its non-GAAP profit of $5.31 per share was 4.2% above analysts’ consensus estimates.

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Robert Buck, President and CEO of TopBuild, commented, “We have accomplished a great deal in 2025 to date, most recently closing the acquisition of Progressive Roofing and establishing a new platform for growth in the large and highly complementary roofing services sector. Additionally, our teams’ efforts early in the year to align our cost structure with the current demand landscape and drive operational improvements are reflected in our healthy second quarter adjusted EBITDA margin of 20.1%. Second quarter sales of $1.3 billion declined 5.0%, driven by an 8.3% decrease in Installation, which was partly offset by 1.1% growth in Specialty Distribution.

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

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, TopBuild’s 14.6% 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 revenue was flat over the last two years.

This quarter, TopBuild reported a rather uninspiring 5% year-on-year revenue decline to $1.30 billion of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 1.6% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not accelerate its top-line performance yet.

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Operating Margin

TopBuild has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 15.9%. 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.

Analyzing the trend in its profitability, TopBuild’s operating margin rose by 2.2 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, TopBuild generated an operating margin profit margin of 16.9%, up 1.5 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

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 27.9% compounded annual growth rate over the last five years, higher than its 14.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into TopBuild’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, TopBuild’s operating margin expanded by 2.2 percentage points over the last five years. On top of that, its share count shrank by 14.1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For TopBuild, its two-year annual EPS growth of 5% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, TopBuild reported adjusted EPS at $5.31, down from $5.42 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 4.2%. Over the next 12 months, Wall Street expects TopBuild’s full-year EPS of $20.75 to stay about the same.

Key Takeaways from TopBuild’s Q2 Results

It was great to see TopBuild’s full-year EBITDA guidance top analysts’ expectations. We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its revenue was in line. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $390 immediately after reporting.

Sure, TopBuild had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.