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Should Value Investors Buy Builders FirstSource (BLDR) Stock?

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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.

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 - Free Report) is a stock many investors are watching right now. BLDR is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 13.44, while its industry has an average P/E of 21.33. 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 13.16.

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 0.59. This compares to its industry's average P/S of 0.8.

Finally, investors should note that BLDR has a P/CF ratio of 13.49. 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. BLDR's current P/CF looks attractive when compared to its industry's average P/CF of 15.41. Within the past 12 months, BLDR's P/CF has been as high as 13.49 and as low as 3.84, with a median of 9.16.

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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