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

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

Profitability

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

Net Margins Return on Equity Return on Assets
Builders FirstSource 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 owned by institutional investors. Comparatively, 73.2% of Lowe’s Companies shares are owned by institutional investors. 1.3% of Builders FirstSource shares are owned by company insiders. Comparatively, 0.2% of Lowe’s Companies shares are owned by company insiders. Strong institutional ownership is an indication 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 that its share price is 124% more volatile than the S&P 500. Comparatively, Lowe’s Companies has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Builders FirstSource 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’ higher possible upside, analysts plainly believe Lowe’s Companies is more favorable than Builders FirstSource.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Builders FirstSource $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 earnings than Builders FirstSource. Builders FirstSource is trading 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 the 13 factors compared between the two stocks.

About Builders FirstSource (Get Rating)

Builders FirstSource, Inc., together with its subsidiaries, manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. It offers lumber and lumber sheet goods comprising dimensional lumber, plywood, and oriented strand board products that are used in on-site house framing; manufactured products, such as wood floor 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 trims and custom products under the Synboard brand name. The company also offers gypsum, roofing, and insulation products, including wallboards, ceilings, joint treatments, and finishes; and siding, metal, and concrete products, such as vinyl, composite, and wood siding products, as well as exterior trims, other exteriors, metal studs, and cement products. In addition, it provides other building products and services, such as cabinets and hardware, as well as turn-key framing, shell 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 Rating)

Lowe's Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States and internationally. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating. It provides home improvement products in various categories, such as appliances, décor, paint, hardware, millwork, lawn and garden, lighting, lumber and building materials, flooring, kitchens and bath, 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 in-warranty and out-of-warranty repair services. The company sells its national brand-name merchandise and private branded products to homeowners, renters, and professional customers. As of January 29, 2021, it operated 1,974 home improvement and hardware stores. The company also sells its products through websites comprising Lowes.com and Lowesforpros.com; and through mobile applications. Lowe's Companies, Inc. was founded in 1921 and is based in Mooresville, North Carolina.

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