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Is Builders FirstSource (BLDR) a Great Value Stock Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Builders FirstSource (BLDR). BLDR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 12.75. This compares to its industry's average Forward P/E of 21.18. Over the last 12 months, BLDR's Forward P/E has been as high as 12.75 and as low as 7.66, with a median of 10.13.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BLDR has a P/S ratio of 0.42. This compares to its industry's average P/S of 0.5.

Finally, our model also underscores that BLDR has a P/CF ratio of 9.89. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BLDR's P/CF compares to its industry's average P/CF of 14.42. Within the past 12 months, BLDR's P/CF has been as high as 9.89 and as low as 4.75, with a median of 6.79.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Builders FirstSource is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BLDR feels like a great value stock at the moment.


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