QS Research · Michael Burry's Scion Capital analyst template · 2006
QXO, Inc. (QXO)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -37% · downside -62% · upside +7%
QXO still trades at 1.54x EV/Sales (N27), near the peer high, while TTM EBITDA is -$153.8M and net income to common is -$656.3M (N14, N15), so the sales multiple is not supported by current operating earnings. Q2 2026 adjusted EBITDA margin fell to 8.4% from 10.7% (S29, S31), and the July 1, 2026 TopBuild close added about 312M shares, $1.0B of Series C preferred and $6.0B of new debt outside the TTM figures (S29). Using the same TTM $9.90B revenue base as section 13: 0.79x/1.09x/1.62x EV/Sales gives $7.82B/$10.79B/$16.04B EV; less $3.25B net debt and divided by 1,037.49M shares gives $4.41/$7.27/$12.33 per share, or -62%/-37%/+6.7% from $11.56 (N1, N4, N10, N24, S1). The base case is the median-peer 1.09x EV/Sales case at $7.27, about -37%, and the short rule is met because the upside is only +6.7%.
Key numbers
- Share price: $11.56
- Market cap: $11.99B
- Latest financial period: TTM to Jun 30, 2026
- Revenue (TTM): $9.90B
- Price / book: 1.16x
The 15 boxes
- ✓ 1. Long-form business notes
QXO is now a building-products distributor, not the SilverSun software/consulting firm of the FY2020 report: the April 29, 2025 Beacon acquisition turned FY2025 revenue into $6.84B from $56.9M in FY2024, with about 600 branches and over 110,000 customers. FY2025 gross profit was $1.57B, but operating income was -$245.2M and net income to common was -$388.3M, while operating cash flow was $261.4M. It sells roofing and complementary products through branches to contractors and builders, had no customer over 1% of FY2025 net sales, and targets $50B of annual revenue within a decade via M&A and organic growth.
- ✓ 2. Competitive advantage
QXO has a claimed scale-based purchasing and supplier-relationship advantage—it is the largest publicly traded North American distributor of roofing, waterproofing and complementary building products—but the 10-K says the industry remains highly fragmented and competitive against national, regional and local distributors and big box retailers. The financial record does not prove durable margin power: FY2025 revenue was $6.84B, gross profit $1.57B, operating income -$245.2M and net income to common -$388.3M. Supplier concentration and vendor-rebate/pricing pass-through risk further limit the case for a durable moat.
- ✓ 3. 10-Q takeaways
The latest 10-Q (quarter ended 2026-06-30, filed 2026-08-14) shows sales of $3.25 billion in Q2 2026 vs $1.91 billion in Q2 2025, but the jump is acquisition-driven ($595 million from Kodiak plus a full quarter of Beacon); no same-store metric is given. GAAP gross margin rose to 24.7% from 21.1%, yet adjusted gross margin fell to 24.7% from 25.3% because Q2 2025 was burdened by an $80 million non-cash inventory fair value adjustment — the underlying margin narrowed on product cost inflation. The quarter still lost money on a GAAP basis (net loss $55 million, operating loss $42 million) while Adjusted EBITDA rose to $272 million from $204 million, though Adjusted EBITDA margin fell to 8.4% from 10.7%. Liquidity was $4.70 billion at June 30, 2026, and the ~$15 billion TopBuild deal closed on July 1, 2026, funded with ~312 million new shares, $1.0 billion of Series C preferred and $6.0 billion of new debt.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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