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Builders FirstSource (NYSE:BLDR) shares gapped up 7.9% on Monday after the building products firm raised its full-year adjusted EBITDA margin and free cash flow outlooks following stronger than expected second quarter results.

The company sees 2022 adjusted EBITDA margin growing by 120 to 160 basis points, compared with 90 to 110 bps in the previous target.

Free cash flow for this year is expected to be $2.5B-3.0B vs. $2.0B-2.4B in the prior view.

In reference to its strong adjusted EBITDA growth during the second quarter, CEO and President Dave Flitman attributed that performance to “solid demand for housing across our markets, ongoing productivity initiatives and pricing discipline in an improving but still supply-constrained environment,” he said during his company’s Q2 earnings call.

So far this year, the company has spent approximately $230M on mergers and acquisitions, and “we expect to invest at least $500 million for the full year,” Flitman added.

Seeking Alpha’s Quant Rating and the average Wall Street Analyst view, meanwhile, screens BLDR as a Strong Buy.

Take a look at why SA contributor thinks shares of Builders FirstSource are undervalued.

Image and article originally from Read the original article here.

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