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Are Investors Undervaluing Builders FirstSource (BLDR) Right Now?

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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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One stock to keep an eye on is Builders FirstSource (BLDR - Free Report) . BLDR is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 11.89 right now. For comparison, its industry sports an average P/E of 21.26. Over the last 12 months, BLDR's Forward P/E has been as high as 12.56 and as low as 7.22, with a median of 9.99.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BLDR has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.49.

Finally, we should also recognize that BLDR has a P/CF ratio of 9.16. 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 14.42. Within the past 12 months, BLDR's P/CF has been as high as 9.53 and as low as 4.75, with a median of 6.67.

Value investors will likely look at more than just these metrics, but the above data helps show that Builders FirstSource is likely undervalued currently. And when considering the strength of its earnings outlook, BLDR sticks out at as one of the market's strongest value stocks.


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