Is Builders FirstSource (BLDR) a Great Value Stock Right Now?
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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 to watch right now 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 a P/E ratio of 15.39, which compares to its industry's average of 22.23. 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 11.44.
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 0.31. This compares to its industry's average P/S of 0.4.
Finally, we should also recognize that BLDR has a P/CF ratio of 9.95. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. BLDR's P/CF compares to its industry's average P/CF of 15.41. Within the past 12 months, BLDR's P/CF has been as high as 11.23 and as low as 4.19, with a median of 8.46.
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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