QXO Inc. (NYSE:QXO) reported $14.54 million in revenue in its second quarter two years earlier, when it was still mostly a software and services company. In the second quarter of 2026, it reported $3.25 billion, after a run of acquisitions turned it into a building products distributor. But profit has lagged the sales growth. Adjusted EBITDA margin slipped to 8.4% from 10.7% a year earlier, and QXO still reported a $55 million net loss after interest, amortization, and deal costs. So the central question is whether size can turn into earnings.
The company distributes and installs building products, and it says it is now the largest distributor of insulation and waterproofing products and the second-largest in roofing. The scale looks real, but the profit has not shown up yet, and the stock now depends on whether that changes. Investors looking for more ideas like QXO can find it in our recent list of 9 Best Bitcoin Stocks to Buy Now.
Acquisitions Drove the Jump in Sales
Acquisitions are behind the jump. Kodiak, which QXO bought at the start of the second quarter, added $595 million in sales, and the year-earlier quarter held Beacon, the roofing distributor, for only two months.
So part of the gain comes from owning Beacon for a full quarter, not from new demand. TopBuild closed the day after the quarter ended, which means its results are missing here, and the next quarterly report will be the first to include them.
The Business Is Broadening Beyond Roofing
Management’s case rests on that wider reach. Brad Jacobs, QXO’s chairman and chief executive, says the TopBuild deal gives the company more scale and a broader presence at customers’ job sites. He wants to more than double EBITDA by 2030.
The mix is already changing, with residential roofing falling to 39.0% of sales from 48.7% a year earlier as other building products took a bigger share. That leaves QXO less tied to one housing-linked category, though more of its results now depend on businesses it has owned for a short time. If you’re looking for more building materials stocks tied to a housing recovery, check out 7 Best Building Materials Stocks to Buy for the Residential Recovery.
Costs and Debt Keep Profit Thin
Jacobs said the first-quarter results reflected softness in the building products industry, and the second-quarter report described them as a reflection of current market conditions. Amortization was $140 million and deal costs were $52 million, which helps explain how $272 million of adjusted EBITDA became a net loss.
Debt adds to the pressure, since long-term debt rose to $6.03 billion from $3.06 billion at the end of 2025. Over the past 12 months, QXO’s operating margin was negative 1.42%, so the core business lost money before interest. For a shareholder, that means the gains from scale have to arrive while interest costs are rising.
Investors Are Pricing QXO on a Rebound
Because profit is thin today, the valuation depends on what comes next. QXO trades at about 45 times estimated 2026 adjusted earnings, compared with a sector median of about 19. That forward P/E compares the share price with expected profit per share, so a higher figure means buyers pay more for each dollar of earnings.
The multiple is high because earnings are expected to fall first. Consensus estimates call for earnings per share to drop 28.80% in 2026, then rise 121.75% in 2027, which would bring the multiple down to about 20, near that sector median. So the stock already assumes the rebound arrives. For investors looking to find cheaper growth stocks, our list of 10 Undervalued Growth Stocks to Buy Now is worth a look.
Professional investors disagree on that rebound. The number of hedge funds holding QXO rose to 83 in the second quarter of 2026 from 65 in the first. That means more of them were willing to own a company whose profits are still ahead. At the same time, 12.79% of its outstanding shares are sold short. Short sellers borrow shares and sell them, hoping to repurchase them at a lower price later, so that figure shows how much of the stock is being bet against.
The company has built its scale, so what remains open is whether that scale can earn a better margin than the 8.4% it posted in the second quarter. The next quarterly report will be the first to include TopBuild, so a margin that stops falling would make the rebound the stock is priced on look far more believable.
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This article is originally published at Insider Monkey.
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