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Is Builders FirstSource (BLDR) Stock Undervalued Right Now?

Zacks Equity Research
·2 min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Builders FirstSource (BLDR) is a stock many investors are watching right now. BLDR is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 13.89 right now. For comparison, its industry sports an average P/E of 21.86. BLDR's Forward P/E has been as high as 19.69 and as low as 4.52, with a median of 11.89, all within the past year.

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Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.51. This compares to its industry's average P/S of 0.61.

Finally, our model also underscores that BLDR has a P/CF ratio of 11.68. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.41. Over the past year, BLDR's P/CF has been as high as 11.68 and as low as 3.84, with a median of 8.49.

These are just a handful of the figures considered in Builders FirstSource's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BLDR is an impressive value stock right now.


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Zacks Investment Research