Now trading at a price of $180.97, Builders FirstSource has moved 5.0% so far today.
Builders FirstSource returned gains of 36.8% last year, with its stock price reaching a high of $214.7 and a low of $120.8. Over the same period, the stock outperformed the S&P 500 index by 6.3%. More recently, the company's 50-day average price was $184.41. 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 34.62%:
| 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 | $182.03 |
| P/E Ratio | 9.74 | 9.23 | 9.61 | 6.02 | 3.93 | 15.09 |
| 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 | 11.49 |
| 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 Priced Beyond Its Margin of Safety:
Builders FirstSource has a trailing twelve month P/E ratio of 16.2, compared to an average of 22.6 for the Consumer Discretionary sector. Based on its EPS guidance of $12.05, the company has a forward P/E ratio of 15.3. According to the 31.6% compound average growth rate of Builders FirstSource's historical and projected earnings per share, the company's PEG ratio is 0.51. 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 17.2%. On this basis, the company's PEG ratio is 0.95. 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 4.9 is higher than the sector average of 3.19. The company's shares are currently trading 82.3% below their Graham number. Ultimately, Builders FirstSource's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
Builders FirstSource Has an Analyst Consensus of Some Upside Potential:
The 18 analysts following Builders FirstSource have set target prices ranging from $169.0 to $232.0 per share, for an average of $206.87 with a buy rating. The company is trading -12.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Builders FirstSource has an average amount of shares sold short because 3.2% of the company's shares are sold short. Institutions own 99.6% of the company's shares, and the insider ownership rate stands at 1.86%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $2,632,897,258.
