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QS Research · Michael Burry's Scion Capital analyst template · 2006

QXO, Inc. (QXO)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: SHORT

Conviction medium · base case -40% · downside -90% · upside +3%

Section 13 did not state a base case, so I use the same $9.90B TTM revenue base and set the base at the peer median ex-QXO 1.08x EV/Sales (SiteOne), because QXO's negative GAAP EBITDA does not support a Ferguson-like 1.62x. Base: EV = 1.08 × $9.90B = $10.69B; equity = $10.69B − $3.26B net debt = $7.43B; per share = $7.43B / 1,037.49M = $7.16, 40.1% below $11.95. Downside at BCC's 0.45x gives $1.15/share (-90.4%); upside at FERG's 1.62x gives $12.31/share (+3.0%). Because the base case is at least 30% below price and the upside is no more than 25% above, the short rule is met; the asymmetry is poor because the downside dwarfs any upside.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    QXO transformed from SilverSun Technologies, a small business software/IT services company, into a building products distributor through the April 29, 2025 Beacon Acquisition, becoming the largest publicly traded distributor of roofing, waterproofing and complementary building products in North America. The acquired QXO Building Products operates approximately 600 branches across the U.S. and Canada and serves over 110,000 customers; FY2025 revenue surged to $6.84B from $56.9M in FY2024. The company targets $50B annual revenue within a decade via acquisitions like Kodiak Building Partners ($2.25B agreed Feb 2026) and organic initiatives, while FY2025 operating and net losses were -$245.2M and -$388.3M respectively.

  2. ✓ 2. Competitive advantage

    QXO/Beacon is the largest publicly-traded distributor of roofing, waterproofing and complementary building products in North America, and it uses national/regional/local procurement to buy more economically than most competitors. But the industry is fragmented and competitive, with national, regional and local specialty distributors and big box retailers. The available GAAP history shows persistent operating losses from FY2021-FY2025 despite scale, so margins/returns do not yet demonstrate a durable advantage. Supplier concentration and price volatility are key risks.

  3. ✓ 3. 10-Q takeaways

    Q2 2026 net sales jumped to $3.25B from $1.91B a year earlier on the Kodiak and Beacon acquisitions, with GAAP gross margin up 3.6 pp to 24.7% but adjusted gross margin slightly lower at 24.7% vs 25.3%. The quarter still posted an operating loss of $(42)M and net loss of $(55)M, though adjusted EBITDA was positive $272M, and six-month net loss widened sharply to $(282)M. Liquidity remains strong at $4.70B, and management expects seasonally strongest sales and income in Q2-Q4; new risk factors highlight supplier concentration and raw material price volatility.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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