Head-To-Head Analysis: Builders FirstSource (BLDR) & The Home Depot (HD)

Builders FirstSource (NASDAQ: BLDR) and The Home Depot (NYSE:HD) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Volatility and Risk

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Builders FirstSource has a beta of 2.05, meaning that its share price is 105% more volatile than the S&P 500. Comparatively, The Home Depot has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Builders FirstSource and The Home Depot, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Builders FirstSource 0 2 8 0 2.80
The Home Depot 0 6 21 0 2.78

Builders FirstSource presently has a consensus price target of $23.35, indicating a potential upside of 22.51%. The Home Depot has a consensus price target of $195.02, indicating a potential upside of 13.05%. Given Builders FirstSource’s stronger consensus rating and higher probable upside, equities analysts plainly believe Builders FirstSource is more favorable than The Home Depot.

Valuation and Earnings

This table compares Builders FirstSource and The Home Depot’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Builders FirstSource $7.03 billion 0.31 $38.78 million $1.27 15.01
The Home Depot $100.90 billion 2.00 $8.63 billion $7.46 23.12

The Home Depot has higher revenue and earnings than Builders FirstSource. Builders FirstSource is trading at a lower price-to-earnings ratio than The Home Depot, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Builders FirstSource and The Home Depot’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Builders FirstSource 0.55% 39.79% 4.81%
The Home Depot 8.55% 306.73% 19.57%

Dividends

The Home Depot pays an annual dividend of $4.12 per share and has a dividend yield of 2.4%. Builders FirstSource does not pay a dividend. The Home Depot pays out 55.2% of its earnings in the form of a dividend. The Home Depot has raised its dividend for 5 consecutive years.

Insider and Institutional Ownership

98.0% of Builders FirstSource shares are held by institutional investors. Comparatively, 70.7% of The Home Depot shares are held by institutional investors. 14.6% of Builders FirstSource shares are held by company insiders. Comparatively, 0.3% of The Home Depot shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

The Home Depot beats Builders FirstSource on 11 of the 17 factors compared between the two stocks.

Builders FirstSource Company Profile

Builders FirstSource, Inc. manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. The company operates through four segments: Northeast, Southeast, South, and West. Its products include lumber and lumber sheet goods comprising dimensional lumber, plywood, and OSB products that are used in on-site house framing; and windows, and interior and exterior door units, as well as interior trims and custom products under the Synboard brand. The company's manufactured products consist of wood floor and roof trusses, steel roof trusses, wall panels, stairs, and engineered wood; gypsum, roofing, and insulation products, including wallboards, ceilings, joint treatments, and finishes, as well as vinyl, composite, and wood sidings; and exterior trims, other exteriors, metal studs, and cement products. In addition, it offers other building products and services, such as cabinets and hardware, as well as turn-key framing, shell construction, design assistance, and professional installation services. Further, the company supplies professional grade building products, such as lumber and lumber sheet goods, and various windows, doors, and millwork lines. The company was formerly known as BSL Holdings, Inc. and changed its name to Builders FirstSource, Inc. in October 1999. Builders FirstSource, Inc. was founded in 1998 and is based in Dallas, Texas.

The Home Depot Company Profile

The Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, lawn and garden products, and décor products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself and professional customers. The company also offers installation programs that include flooring, cabinets, countertops, water heaters, and sheds; and professional installation in various categories sold through its in-home sales programs, such as roofing, siding, windows, cabinet refacing, furnaces, and central air systems, as well as acts as a contractor to provide installation services to its do-it-for-me customers through third-party installers. In addition, it provides tool and equipment rental services. The company primarily serves home owners; and professional renovators/remodelers, general contractors, handymen, property managers, building service contractors, and specialty tradesmen, such as installers. It also sells its products through online. As of January 28, 2018, the company operated 2,284 stores, including 1,980 in the United States, including the Commonwealth of Puerto Rico, and the territories of the U.S. Virgin Islands and Guam; 182 in Canada; and 122 in Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia.

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