Builders FirstSource (NASDAQ:BLDR) & Lowe’s Companies (NYSE:LOW) Financial Analysis

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FirstSource constructors (NASDAQ: BLDRGet a rating) and Lowe’s Companies (NYSE: LOWGet a rating) are both large-cap retail/wholesale companies, but which is the better stock? We’ll compare the two companies based on their risk strength, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Profitability

This table compares the net margins, return on equity and return on assets of Builders FirstSource and Lowe’s Companies.

Net margins Return on equity return on assets
FirstSource Builders 8.67% 39.10% 19.57%
Lowe’s Companies 8.77% -551.52% 17.35%

Insider and Institutional Ownership

97.2% of Builders FirstSource shares are held by institutional investors. By comparison, 73.2% of Lowe’s Companies stock is held by institutional investors. 1.3% of Builders FirstSource stock is held by insiders of the company. By comparison, 0.2% of Lowe’s Companies stock is held by company insiders. Strong institutional ownership indicates that hedge funds, large money managers, and endowments believe a company is poised for long-term growth.

Volatility and risk

Builders FirstSource has a beta of 2.24, meaning its stock price is 124% more volatile than the S&P 500. Comparatively, Lowe’s Companies has a beta of 1.32, meaning its stock price is 32% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of the current ratings for Builders FirstSource and Lowe’s Companies, as provided by MarketBeat.

Sales Ratings Hold odds Buy reviews Strong buy odds Rating
FirstSource Builders 0 0 0 0 N / A
Lowe’s Companies 0 2 18 0 2.90

Lowe’s Companies has a consensus target price of $263.74, suggesting a potential upside of 31.62%. Given Lowe’s Companies’ possible higher upside, analysts clearly believe that Lowe’s Companies is more favorable than Builders FirstSource.

Benefits and evaluation

This table compares revenue, earnings per share and valuation of Builders FirstSource and Lowe’s Companies.

Gross revenue Price/sales ratio Net revenue Earnings per share Price/earnings ratio
FirstSource Builders $19.89 billion 0.59 $1.73 billion $8.51 7.74
Lowe’s Companies $96.25 billion 1.38 $8.44 billion $11.97 16.74

Lowe’s Companies has higher revenue and profit than Builders FirstSource. Builders FirstSource trades at a lower price-to-earnings ratio than Lowe’s Companies, indicating that it is currently the more affordable of the two stocks.

Summary

Lowe’s Companies beats Builders FirstSource on 8 of 13 factors compared between the two stocks.

About Builders FirstSource (Get a rating)

Builders FirstSource, Inc., together with its subsidiaries, manufactures and supplies building materials, fabricated components and construction services to professional home builders, contractors, remodelers and consumers in the United States. It offers lumber and lumber sheet products including dimensional lumber, plywood and oriented strand board products that are used in the framing of on-site homes; manufactured products, such as wooden floors and roof trusses, steel roof trusses, wall panels, stairs and engineered wood products; and windows, and interior and exterior door units, as well as interior and exterior trim and custom products under the Synboard brand. The Company also offers gypsum, roofing and insulation products, including wall panels, ceilings, joint treatments and finishes; and siding, metal and concrete products, such as vinyl, composite and wood siding products, as well as exterior trim, other exterior, metal studs and cement products. In addition, it provides other construction products and services, such as cabinetry and hardware, as well as turnkey framing, hull construction, design assistance and professional installation services. 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.

About Lowe’s Companies (Get a rating)

Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States and around the world. The company offers a range of products for construction, maintenance, repair, renovation and decoration. It provides home improvement products in various categories, such as appliances, decoration, paint, hardware, millwork, lawn and garden, lighting, wood and building materials, siding flooring, kitchens and bathrooms, rough plumbing and electrical, seasonal and outdoor living, and tools. It also offers installation services through independent contractors in various product categories; extended protection plans; and warranty and non-warranty repair services. The company sells its national brand merchandise and private label products to landlords, renters and professional customers. As of January 29, 2021, it operated 1,974 hardware and hardware stores. The company also sells its products through websites including Lowes.com and Lowesforpros.com; and through mobile apps. Lowe’s Companies, Inc. was founded in 1921 and is based in Mooresville, North Carolina.



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