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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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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

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 is trading with P/E ratio of 13.22 right now. For comparison, its industry sports an average P/E of 21.43. Over the last 12 months, BLDR's Forward P/E has been as high as 19.69 and as low as 4.52, with a median of 13.09.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. 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 0.53. This compares to its industry's average P/S of 0.74.

Finally, investors will want to recognize that BLDR has a P/CF ratio of 12.70. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.41. Over the past year, BLDR's P/CF has been as high as 13.41 and as low as 3.84, with a median of 8.97.

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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