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Is Builders FirstSource (BLDR) Stock Undervalued Right Now?

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Zacks Equity Research
·2 min read
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Builders FirstSource (BLDR) is a stock many investors are watching right now. BLDR is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 12.59, while its industry has an average P/E of 21.96. BLDR's Forward P/E has been as high as 19.69 and as low as 4.52, with a median of 11.75, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BLDR has a P/S ratio of 0.44. This compares to its industry's average P/S of 0.6.

Finally, our model also underscores that BLDR has a P/CF ratio of 10.26. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. BLDR's current P/CF looks attractive when compared to its industry's average P/CF of 15.41. Over the past 52 weeks, BLDR's P/CF has been as high as 11.49 and as low as 3.84, with a median of 8.19.

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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