QXO INC

GREENWICH, Conn.--(BUSINESS WIRE)--QXO, Inc. (NYSE: QXO) (the “Company” or “QXO”) today announced it intends to make an offering of $2 billion of shares of its common stock (the “Offering”). QXO's common stock is listed on the New York Stock Exchange under the symbol “QXO.” QXO intends to grant the underwriters of the Offering an option to purchase up to an additional $300 million of shares of common stock at the public offering price less underwriting discounts and commissions. QXO intends to.» Mehr auf businesswire.com

I upgrade GMS to 'Hold' as QXO's acquisition offer and reasonable valuation provide a floor, despite ongoing end-market challenges. Wallboard and Ceiling segments show signs of stabilization, but Steel Framing and commercial markets remain weak amid high rates and policy uncertainty. Cost reductions and steady pricing support margin recovery, yet cash flow remains pressured and EBITDA growth is likely limited near-term.» Mehr auf seekingalpha.com

Key Points in This Article: Billionaire Brad Jacobs’ proven ability to transform small ventures into industry leaders through strategic acquisitions fuels optimism for his latest venture in the building products distribution market. His history of scaling businesses and spinning off successful entities showcases a knack for creating value, despite missing initial revenue targets. Jacobs’ ambitious consolidation strategy faces risks from a sluggish housing market, but his track record suggests potential for long-term success. Nvidia made early investors rich, but there is a new class of ‘Next Nvidia Stocks’ that could be even better. Click here to learn more. Building a Giant Amid Market Headwinds Brad Jacobs is a business alchemist, transforming modest ventures into industry giants with a knack for strategic consolidation. Though not a household name, his track record speaks volumes. He catapulted United Rentals (NYSE:URI) from a regional equipment rental outfit to a national leader by snapping up smaller competitors. Similarly, he built United Waste Systems into a powerhouse before selling it to Waste Management (NYSE:WM) for $2.5 billion. Jacobs repeated this magic with Express-1 Expedited Solutions, morphing it into XPO Logistics (NYSE:XPO), a logistics titan. From XPO, he spun off GXO Logistics (NYSE:GXO) and RXO (NYSE:RXO), creating standalone giants in warehousing and freight brokerage. Jacobs did it again with QXO (NYSE:QXO), a $1 billion bet on the $800 billion building products distribution market. His plan? Consolidate the fragmented industry, targeting a $1 billion revenue run-rate in year one, $5 billion in three years, and tens of billions in a decade. He later increased the goal to $50 billion in annual revenue over the next decade. Given Jacobs’ Midas touch, QXO seems poised for success, but investors wonder: what’s next when his alphabet of triumphs runs dry? Empire-Building Playbook on Display Again Jacobs continues to charge forward with QXO to dominate the building products distribution industry. Following its $11 billion acquisition of Beacon Roofing Supply in April, QXO just surprised the market with a $5 billion all-cash offer for GMS (NYSE:GMS), a drywall and interior construction distributor. Jacobs’ strategy — consolidating fragmented markets with M&A and tech efficiencies — has sparked a 41% year-to-date stock surge and 110% rally from its 52-week low, though QXO lags 83% below last year’s price. I’m not too worried about that. QXO was thinly traded before Jacobs got involved and he subsequently raised $3.5 billion in equity by selling shares in a private placement and another $620 million with a second PIPE deal. It had over $5 billion in cash at the end of the first quarter. The company has since raised more than $2 billion in additional capital. With a knack for turning small players into giants, Jacobs’ ambition fuels QXO’s allure, but the U.S. housing market’s woes raise questions. Growth Prospects: Beacon, GMS, and Beyond QXO’s growth hinges on Jacobs’ M&A prowess and Beacon’s early success. Beacon’s 600 branches and $10 billion revenue provide instant scale, covering 90% of U.S. roofing markets. The GMS bid, at $95.20 per share (a 17.5% premium to where the stock traded before the deal was announced), aims to bolster interior construction, promising faster deliveries and digital tools like EagleView. Jacobs eyes $50 billion in revenue by 2035, doubling EBITDA in the legacy business via AI-driven pricing and inventory tech, and adding on more accretive acquisitions. Wall Street is on board with all four analysts covering QXO rating it a buy and assigning a consensus $34 per share one-year price target, which implies 52% upside. Wolfe Research has an industry high target of $44 per share, and William Blair analysts just initiated coverage with an “Outperform” rating, betting on QXO’s long-term dominance. An earlier Oppenheimer research note said QXO was eyeing around 40 companies that generate approximately $300 billion in aggregate annual revenue. Housing Market Challenges The U.S. housing market, however, throws a wrench. A 4-million-home shortage boosts repair demand, but high interest rates and Trump’s tariff threats stifle new construction, with 30% of QXO’s revenue tied to weak nonresidential projects. Existing home sales fell 0.5% in April from March, according to the National Association of Realtors, and new data from the U.S. Census Bureau showed that new housing starts declined 9.8% in May — the lowest level since May 2020. With no long-term debt and negligible operating lease obligations, QXO raises few liquidity fears, but GMS’s declining EBITDA margins — they dropped 315 basis points from 2022 to 2025, (9.1% from 12.2%, a 26% drop) hint of potential integration hurdles. These headwinds temper QXO’s near-term outlook in a volatile market. Is QXO a Buy Now? QXO’s growth potential under Brad Jacobs’ leadership is enticing, but its valuation and market risks call for caution. Trading at an enterprise value-to-sales ratio of 2x and a forward P/E of 39, QXO’s premium reflects high expectations for its M&A-driven growth. Yet, the shaky housing market could pose a near-term challenge. However, it should be noted that 80% of the business is repair and remodel, so QXO is less tied to the housing shortage than other building products stocks. Risk-tolerant investors may see QXO as a buy, given Jacobs’ track record and early Beacon synergies, but timing matters. A diversified portfolio with stable income stocks can offset QXO’s volatility. Key will be to monitor second-quarter earnings for progress on cost savings and GMS integration later on, assuming the offer is accepted. I don’t like betting against Jacobs, and QXO wouldn’t necesarily be a speculative bet, but it might be best suited for those willing to weather housing and market turbulence and who believe in Jacobs’ long-term vision. You can count me among them, but a dash of risk tolerance is essential. The post Should You Bet on This Billionaire Mastermind Behind Billion-Dollar Empires? appeared first on 24/7 Wall St..» Mehr auf 247wallst.com