Market Inference Overview -- BLDR Stock

Builders FirstSource logged a -3.9% change during today's afternoon session, and is now trading at a price of $143.54 per share.

Builders FirstSource returned gains of 17.2% last year, with its stock price reaching a high of $214.7 and a low of $105.24. Over the same period, the stock underperformed the S&P 500 index by -8.0%. The company's 50-day average price was $170.04. Builders FirstSource, Inc., together with its subsidiaries, manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. Based in Irving, TX, the Large-Cap Consumer Discretionary company has 29,000 full time employees. Builders FirstSource has not offered a dividend during the last year.

Strong Revenue Growth but Similar Gross Margins to the Industry Average of 35.33%:

2018 2019 2020 2021 2022 2023
Revenue (M) $7,725 $7,280 $8,559 $19,894 $22,726 $17,097
Gross Margins 25% 27% 26% 28% 34% 35%
Net Margins 3% 3% 4% 9% 12% 9%
Net Income (M) $205 $222 $314 $1,725 $2,749 $1,541
Net Interest Expense (M) -$108 -$110 -$136 -$136 -$198 -$192
Depreciation & Amort. (M) $98 $100 $117 $547 $497 $558
Diluted Shares (M) 117 117 118 203 163 129
Earnings Per Share $1.76 $1.9 $2.66 $8.48 $16.82 $11.94
EPS Growth n/a 7.95% 40.0% 218.8% 98.35% -29.01%
Avg. Price $17.43 $17.72 $25.86 $51.51 $66.66 $144.49
P/E Ratio 9.74 9.23 9.61 6.02 3.93 11.98
Free Cash Flow (M) $181 $391 $148 $1,516 $3,259 $1,831
CAPEX (M) $101 $113 $112 $228 $340 $476
EV / EBITDA 10.86 9.31 8.74 5.62 4.14 9.59
Total Debt (M) $3,091 $2,555 $3,194 $5,904 $5,956 $6,355
Net Debt / EBITDA 6.6 5.16 4.19 2.0 1.38 2.3
Current Ratio 1.88 1.59 2.07 1.86 1.9 1.77

Builders FirstSource benefits from rapidly growing revenues and increasing reinvestment in the business, exceptional EPS growth, and generally positive cash flows. The company's financial statements show a decent current ratio of 1.77 and healthy leverage levels. Furthermore, Builders FirstSource has similar gross margins to its peers.

a Very Low P/E Ratio but Trades Above Its Graham Number:

Builders FirstSource has a trailing twelve month P/E ratio of 14.6, compared to an average of 22.06 for the Consumer Discretionary sector. Based on its EPS guidance of $13.77, the company has a forward P/E ratio of 12.3. According to the 34.2% compound average growth rate of Builders FirstSource's historical and projected earnings per share, the company's PEG ratio is 0.43. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 17.8%. On this basis, the company's PEG ratio is 0.82. This suggests that its shares are undervalued. In contrast, Builders FirstSource is likely overvalued compared to the book value of its equity, since its P/B ratio of 3.53 is higher than the sector average of 3.18. The company's shares are currently trading 44.6% below their Graham number.

Builders FirstSource Has an Analyst Consensus of Strong Upside Potential:

The 17 analysts following Builders FirstSource have set target prices ranging from $175.0 to $242.0 per share, for an average of $203.57 with a buy rating. The company is trading -29.5% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Builders FirstSource has an average amount of shares sold short because 3.4% of the company's shares are sold short. Institutions own 95.3% of the company's shares, and the insider ownership rate stands at 1.8%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $2,089,184,411.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.