Is TopBuild Corp. overvalued or undervalued?

As of 6 May 2025, TopBuild Corp. has moved from a very attractive to a fair valuation grade. The company appears to be fairly valued based on its current metrics. The P/E ratio stands at 17, while the industry average P/E is approximately 16.65, indicating that TopBuild is in line with its peers. Additionally, the EV to EBITDA ratio is 11.25, which is competitive when compared to EMCOR Group, Inc. at 16.03 and Comfort Systems USA, Inc. at 20.61.
TopBuild Corp. showcases strong financial performance with a ROCE of 27.05% and an ROE of 29.03%. However, the PEG ratio of 4.19 suggests that the stock may be overvalued relative to its growth prospects. While the stock has shown a 1-month return of 16.05%, outperforming the S&P 500's 3.83%, its 1-year return of -16.44% indicates potential challenges ahead. Overall, TopBuild Corp. is fairly valued in the current market context.