Builders FirstSource
BLDR
$85.30
+0.11%
Builders FirstSource, Inc. is a leading manufacturer and supplier of building materials, operating within the construction industry. The company provides a comprehensive range of structural products and services, including factory-built roof and floor trusses, wall panels, vinyl windows, custom millwork, and professional installation services, primarily catering to residential builders. As a major national player, its competitive identity is built on scale, vertical integration, and a value-added product portfolio that serves both large production builders and custom homebuilders. The current investor narrative is dominated by the cyclical downturn in housing, with attention focused on the company's ability to navigate declining revenue, manage costs to protect margins, and its strategic use of strong free cash flow for shareholder returns through share repurchases.…
BLDR
Builders FirstSource
$85.30
BLDR 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Builders FirstSource's 12-month outlook, with a consensus price target around $110.89 and implied upside of +30.0% versus the current price.
Average Target
$110.89
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$68 - $111
Analyst target range
Analyst coverage for BLDR is limited, with only 5 analysts providing estimates, which is low for a company of its market cap and suggests it may be under-followed by the broader institutional community. The consensus leans towards a Hold or Neutral stance, as evidenced by recent ratings from Stephens & Co. (Equal Weight), Stifel (Hold), and Baird (Neutral), though there are bullish voices like RBC Capital (upgraded to Outperform) and Barclays (Overweight). The average target price implied by the estimated EPS of $9.58 and the forward P/E of 10.30x suggests a price target of approximately $98.67, representing a potential upside of nearly 25% from the current price of $79.12, indicating analysts see value at these depressed levels. The target range, derived from estimated EPS, spans from a low of $9.16 to a high of $9.88, which is relatively tight and implies a consensus around the earnings trajectory rather than wide disagreement on the fundamental outlook. The high target likely assumes a successful navigation of the housing downturn, margin stabilization, and a return to growth, while the low target may factor in a more prolonged recession or further margin compression. The recent institutional rating actions show a mix of reaffirmed Hold ratings and one notable upgrade (RBC Capital), suggesting some analysts are beginning to see a potential inflection point or value opportunity, though conviction remains cautious overall.
Bulls vs Bears: BLDR Investment Factors
The bull and bear cases for BLDR are starkly defined by the tension between its deeply depressed valuation and the severe, ongoing cyclical downturn in its fundamentals. The bear side currently holds stronger evidence, as the accelerating revenue decline (-12.1% YoY), collapsing profitability (net income -83.4%), and persistent negative price momentum are concrete, current realities. The bull case is primarily anticipatory, hinging on a future housing market recovery and earnings normalization priced into the attractive forward P/E of 10.3x. The single most important tension in the investment debate is the timing and magnitude of the housing cycle trough. If BLDR can demonstrate margin stabilization and a sequential bottom in revenue declines sooner than expected, the substantial free cash flow and low forward multiple could drive a powerful rally. Conversely, if the downturn deepens or prolongs, the high trailing P/E and operating leverage could lead to further significant earnings misses and price deterioration.
Bullish
- Strong Free Cash Flow Generation: Despite the cyclical downturn, BLDR generated robust TTM free cash flow of $853.3 million. This provides significant financial flexibility to service debt, fund operations, and return capital to shareholders through share repurchases, insulating the business model during the housing slump.
- Attractive Forward Valuation: The stock trades at a forward P/E of 10.3x based on estimated EPS of $9.58, representing a significant discount to its trailing P/E of 26.3x. This forward multiple suggests the market has priced in a substantial earnings recovery, offering potential for multiple expansion if the housing cycle stabilizes.
- Analyst Target Implies ~25% Upside: The average analyst target price implied by the forward P/E and EPS estimate is approximately $98.67, offering a near 25% upside from the current price of $79.12. This indicates professional analysts see value at these depressed levels, with recent upgrades (e.g., RBC Capital to Outperform) signaling a potential inflection point.
- Solid Balance Sheet & Liquidity: The company maintains a manageable debt-to-equity ratio of 1.30 and strong liquidity with a current ratio of 1.86. This financial stability provides a buffer to weather the cyclical downturn without a liquidity crisis, a critical advantage over more leveraged peers.
Bearish
- Severe Cyclical Revenue & Profit Decline: Q4 2025 revenue fell 12.1% YoY to $3.36B, while net income collapsed 83.4% to $31.5M, compressing the net margin to 0.94% from 4.98%. This demonstrates severe operating leverage working in reverse, with no clear bottom in sight for the housing market downturn.
- Accelerating Negative Momentum: The stock is down 18.81% over the past month and 24.38% over three months, significantly underperforming the S&P 500. This accelerating downtrend, with a 1-month relative strength of -14.53, indicates persistent selling pressure and a lack of investor confidence in a near-term recovery.
- Elevated Trailing P/E on Depressed Earnings: The trailing P/E of 26.34x is high for a cyclical company in a downturn, reflecting severely depressed quarterly earnings. This elevated multiple on trough earnings leaves the stock vulnerable to further downside if the earnings recovery is delayed or weaker than expected.
- High Beta Amplifies Market Volatility: With a beta of 1.636, BLDR is approximately 63.6% more volatile than the broader market. This high beta magnifies downside risk during market sell-offs and increases portfolio risk, making the stock unsuitable for risk-averse investors amid ongoing economic uncertainty.
BLDR Technical Analysis
The stock is in a pronounced and sustained downtrend, with a 1-year price change of -39.66% and a 6-month decline of -38.45%, significantly underperforming the broader market. The current price of $79.12 sits just 3.4% above its 52-week low of $76.5, positioning it at the very bottom of its annual range, which signals deep pessimism and potential oversold conditions but also reflects fundamental deterioration in its end markets. The stock is trading at only 52.4% of its 52-week high of $151.03, indicating it has given up nearly half its value, a level that may attract value-oriented investors but also suggests significant technical damage that will require substantial positive catalysts to reverse. Recent momentum remains severely negative, with the stock down -18.81% over the past month and -24.38% over the past three months, indicating the downtrend is accelerating rather than stabilizing. This short-term weakness contrasts with the already poor long-term trend, confirming a lack of any meaningful bullish divergence or buying interest. The stock's relative strength metrics are deeply negative, at -14.53 for 1-month and -20.38 for 3-month, highlighting its significant underperformance versus the S&P 500, which fell only -4.28% and -4.0% over the same periods. Key technical support is firmly established at the 52-week low of $76.5, while major resistance lies at the 52-week high of $151.03. A decisive breakdown below $76.5 would signal a continuation of the bearish trend, potentially triggering another leg down, whereas a recovery above this level is needed to establish a base. The stock exhibits high volatility with a beta of 1.636, meaning it is approximately 63.6% more volatile than the market, which is critical for risk management as it amplifies both downside and potential upside moves in a recovery scenario.
Beta
1.64
1.64x market volatility
Max Drawdown
-47.2%
Largest decline past year
52-Week Range
$77-$151
Price range past year
Annual Return
-28.9%
Cumulative gain past year
| Period | BLDR Return | S&P 500 |
|---|---|---|
| 1m | -6.4% | +0.5% |
| 3m | -31.6% | -2.1% |
| 6m | -30.4% | +4.0% |
| 1y | -28.9% | +29.5% |
| ytd | -18.5% | -0.4% |
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BLDR Fundamental Analysis
Revenue is in a clear decelerating and declining trajectory, with Q4 2025 revenue of $3.36 billion representing a -12.1% year-over-year contraction. This decline follows a sequential drop from $3.94 billion in Q3 2025 and a peak of $4.46 billion in Q2 2024, illustrating a multi-quarter downtrend as the housing cycle weakens. Segment data shows revenue is broadly distributed, with Lumber and Lumber Sheet Goods at $772.6 million, Manufactured Products at $742.8 million, Specialty Building Products and Services at $949.0 million, and Windows, Doors and Millwork at $893.5 million, indicating no single segment is immune to the cyclical pressures. Profitability has deteriorated sharply, with Q4 2025 net income plunging to $31.5 million from $190.2 million in the year-ago quarter, reflecting a net margin compression to 0.94% from 4.98%. Gross margin for the quarter was 29.84%, down from the trailing twelve-month average of 30.39%, indicating pricing pressure and fixed cost absorption issues on lower volumes. The operating margin collapsed to 1.84% in Q4 from 7.96% a year earlier, highlighting significant operating leverage working in reverse as sales fall faster than costs can be adjusted. The balance sheet remains leveraged but manageable, with a debt-to-equity ratio of 1.30, though liquidity is solid with a current ratio of 1.86. The company generated robust free cash flow of $853.3 million on a TTM basis, providing ample capacity to service debt and return capital to shareholders, as evidenced by significant share repurchase activity in recent quarters. Return on equity has weakened to 10.0% from much higher levels in prior periods, but the strong cash generation and an ROA of 4.5% suggest the business model remains fundamentally cash-generative even in a downturn.
Quarterly Revenue
$3.4B
2025-12
Revenue YoY Growth
-0.12%
YoY Comparison
Gross Margin
+0.29%
Latest Quarter
Free Cash Flow
$853284000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is BLDR Overvalued?
Given the company's positive net income, the primary valuation metric selected is the Price-to-Earnings (P/E) ratio. The trailing P/E is elevated at 26.34x, which is high for a cyclical business in a downturn, largely due to depressed earnings. The forward P/E, based on estimated EPS of $9.58, is a much lower 10.30x, indicating the market expects a significant earnings recovery in the coming year; the wide gap between trailing and forward multiples underscores the expectation that current depressed profitability is temporary. Compared to industry averages, BLDR's valuation presents a mixed picture: its Price-to-Sales ratio of 0.75x and EV-to-Sales of 0.9x are likely at a discount to many peers, reflecting the cyclical headwinds. However, its elevated trailing P/E of 26.34x suggests the market is still pricing in a normalized earnings level rather than the current trough, implying a premium based on future recovery prospects. The EV-to-EBITDA of 12.29x is a more standard multiple for the sector, balancing the company's strong cash flow generation against its leverage and cyclical exposure. Historically, the stock's current trailing P/E of 26.34x is well below its own historical peaks seen in 2024 (e.g., 90.31x in Q4 2025 due to low earnings, but more meaningfully, 19.77x in Q3 2024). It is trading closer to the lower end of its historical valuation band on a normalized earnings basis, suggesting the market has priced in substantial cyclical risk. This positioning indicates that if the company can navigate the downturn and earnings recover as forecasted, there is potential for multiple expansion, but it also reflects the high uncertainty and negative sentiment currently surrounding housing-related stocks.
PE
26.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 2x~90x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are acute and center on the severe margin compression from declining volumes. Q4 2025 operating margin collapsed to 1.84% from 7.96% a year ago, demonstrating negative operating leverage as fixed costs are spread over lower revenue. While the balance sheet is stable (D/E 1.30), the risk is that continued revenue declines—evidenced by the multi-quarter downtrend from $4.46B in Q2 2024 to $3.36B in Q4 2025—further erode profitability and cash generation, potentially straining the company's ability to maintain its share repurchase program, a key support for the stock.
Market & Competitive Risks are dominated by the stock's high sensitivity to the housing cycle and its premium valuation on trailing earnings. The stock's beta of 1.636 means it will disproportionately suffer in any broader market downturn or risk-off environment. Furthermore, trading at a trailing P/E of 26.34x—a premium multiple for a cyclical business—creates valuation compression risk if investor sentiment towards housing remains negative or if interest rates stay elevated, delaying a recovery. There is also sector rotation risk away from economically sensitive industrials.
Worst-Case Scenario involves a prolonged housing recession coupled with a broader economic slowdown. This could lead to revenue declining another 15-20%, pushing operating margins into negative territory and causing 2026 EPS estimates of $9.58 to be cut in half. In this adverse scenario, the stock could re-test and break below its 52-week low of $76.5, potentially falling to the $60-$65 range, which would represent a further 20-25% decline from the current price. This downside is consistent with the stock's historical max drawdown of -47.16% and reflects the high volatility inherent in its business model during downturns.