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Builders FirstSource Inc (BLDR)

Undervalued
IndustrialsBuilding Products & EquipmentUnited States

Fundamental

61

Price

$57.01

Market Cap

$6.24B

Part 1 · What the company is worth

Overview

Builders FirstSource is the largest United States supplier of building materials, manufactured components and construction services to professional homebuilders. It runs roughly 585 locations across 43 states, grouped into three geographic divisions (East, Central, West) that the company aggregates into a single reportable segment. Besides distributing lumber, sheet goods, windows, doors and millwork, it manufactures factory-built roof and floor trusses, wall panels, vinyl windows and custom millwork, and sells installation and turnkey framing services plus design and estimating software (Paradigm). Its customers are almost entirely trade professionals — production and custom homebuilders, multi-family developers, remodellers and sub-contractors — not consumers, so it is not a retailer like Home Depot. Net sales were $15,190.6 million in fiscal 2025, down 7.4% from 2024 on a below-normal housing-starts environment and commodity deflation.

How it makes money

Revenue is transactional: the company sells and delivers materials and installed components job by job, mostly on trade credit, and recognises sales when the product is delivered or the service performed. There is no subscription and almost no recurring contracted backlog. Roughly a quarter of sales is pass-through commodity lumber, whose price the company does not control — when lumber prices fall, sales fall with them even if volumes hold. The economics improve as the mix shifts towards value-added products (manufactured components plus windows, doors and millwork), which were 47.7% of 2025 sales and carry higher margins than raw commodity lumber. Gross margin was 30.4% of net sales in 2025, down 240 basis points from 2024.

Revenue by segment

Specialty building products and services26.8%

Distributed specialty items such as siding, roofing, insulation, gypsum, engineered wood and hardware, together with installation and turnkey services sold to builders. Net sales of $4,068.0 million in 2025.

Lumber and lumber sheet goods25.5%

Commodity dimensional lumber, plywood and OSB resold to builders, priced off volatile wood markets. Net sales of $3,875.9 million in 2025.

Windows, doors and millwork25.3%

Vinyl windows the company manufactures, plus purchased windows, interior and exterior doors, pre-hung door units, stairs and custom millwork sold and often installed for builders. Net sales of $3,836.2 million in 2025; counted as value-added product.

Manufactured products22.4%

Factory-built roof and floor trusses, wall panels and other engineered components produced in the company's own plants and shipped ready to assemble on site, cutting the framing labour a builder needs. Net sales of $3,410.5 million in 2025; the other half of value-added product.

Competitive moat

Scale · Narrow

Builders FirstSource is several times larger than any other pro-dealer in a market its own 10-K calls fragmented and highly competitive with low barriers to entry. Scale shows up in purchasing power with mills and window makers, in a manufacturing footprint that few rivals can replicate, and in the density of yards needed to serve a large production builder across many markets at once. What scale does not buy is switching costs: a builder can change supplier between jobs, a quarter of the mix is a commodity whose price is set elsewhere, and the 10-K explicitly flags competitive pricing pressure from customers. That is why the advantage is real but narrow rather than wide.

What drives demand

Cyclical

Demand tracks US housing starts, which move with mortgage rates, home affordability and builder confidence — and they move a lot. Volume and price compound in the same direction: in a downturn builders start fewer homes and lumber prices fall at the same time, which is why 2025 sales dropped 7.4% and net income fell 59.6% to $435.2 million. Repair and remodel work is steadier than new construction but is only part of the mix, and multi-family is the most violent of the three end markets. The fixed cost of yards, trucks and plants means operating profit swings far more than sales in both directions.

Key risks

  • Dependence on new residential construction — The company states that its results depend on new single-family and multi-family home construction, which is itself driven by interest rates, mortgage availability, consumer confidence and employment — none of which it controls. In 2025 core organic sales fell 9.0% in single-family, 23.5% in multi-family and 6.9% in repair and remodel.
  • Cyclical market and commodity price swings — The building supply industry is described as subject to cyclical market pressures, including volatility in lumber and lumber sheet goods prices. Because those products pass through at market prices, deflation reduces reported sales and can compress margins even when volumes are stable.
  • Fragmented, competitive industry and pricing pressure — The 10-K describes a fragmented and competitive industry with low barriers to entry, and separately flags competitive pricing pressure from customers. Large builders can push for concessions or bring work in-house.
  • Loss of significant customers — The company lists the loss of one or more significant customers among its risk factors: even with a diversified base, a large production builder leaving would remove volume that is hard to replace quickly in the same local markets.
  • Product shortages and supplier dependence — Results can be hurt by product shortages or by the loss of key suppliers, since the company relies on outside mills and manufacturers for much of what it distributes and for inputs to its own plants.
  • Acquisitions and growth strategy execution — The company warns it may be unable to implement its growth strategy and that strategic acquisitions involve risks, including integration of the acquired businesses — a live issue given that acquisitions added 3.8% to fourth-quarter 2025 sales while organic volumes fell.
  • Labour, IT systems and cybersecurity — Risk factors include failure to attract and retain key employees, disruption of information technology systems, cybersecurity incidents, and the possibility that supply-chain and technology initiatives themselves disrupt operations.

Customer concentration

Top customers account for 14% of revenue

The fiscal 2025 10-K states that the top ten customers accounted for about 14% of net sales and the largest single customer for about 4%. Those largest accounts include D.R. Horton, Lennar, PulteGroup, Toll Brothers and Meritage Homes. Concentration at group level is therefore low, but it understates local exposure: in an individual market a single production builder can be a large share of a yard's volume.

The case for

Buyers argue that this is the scale player in a fragmented industry going through a housing downcycle, and that the downcycle is the reason the numbers look weak rather than evidence that the business is broken. They point to the shift towards value-added products — manufactured components and windows, doors and millwork were 47.7% of 2025 sales — as a way to earn more per house and to sell builders a solution to their own labour shortage, and to a gross margin that was still 30.4% in a year when sales fell 7.4%. They also note that the company keeps buying smaller dealers, adding 3.8% to fourth-quarter sales through acquisitions while organic volumes fell, and that management guides 2026 net sales of $14.8 to $15.8 billion. The underlying argument is that when housing starts normalise, the same fixed cost base carries much higher volumes.

The case against

Sellers fear that the cycle has further to run and that the operating leverage works both ways: 2025 net sales fell 7.4%, gross margin gave up 240 basis points to 30.4%, and net income fell 59.6% to $435.2 million, with management guiding 2026 gross margin of 28.5% to 30% — lower again. They point out that a quarter of revenue is commodity lumber whose price the company cannot set, that the company's own risk factors describe a fragmented industry with low barriers to entry and pricing pressure from customers, and that multi-family volumes fell 23.5% in 2025. They also question the acquisition programme, which supports headline sales while organic volumes decline and which carries integration risk, and they note that in a business with no switching costs a large builder can move its work elsewhere between jobs.

Generated on September 18, 2026 with claude-haiku-4-5 — shared with all users

Direct competitors

Who this company fights with for the same customers

Compare

Generated on September 18, 2026 with claude-haiku-4-5 — shared with all users

P/E: 17.7Score: 66Market cap: $4.26B

Through its UFP Site Built business it manufactures roof and floor trusses and wall panels for single-family and multifamily builders, the same value-added manufactured products that are the core of Builders FirstSource's margin.

P/E: 19.9Score: 65Market cap: $289.22B

Its Pro business, enlarged by the purchases of SRS Distribution and GMS, is pushing directly into supplying professional homebuilders and contractors, the customer base Builders FirstSource depends on.

P/E: 15.6Score: 74Market cap: $105.29B

Historically a retailer to consumers, it is moving into professional builder supply — notably with the acquisition of Foundation Building Materials — for the same contractor spending on lumber, millwork and exterior products.

84 Lumber CompanyNot tracked

A privately held national chain of lumberyards and component plants that sells framing lumber, trusses, doors and windows to the same professional homebuilders Builders FirstSource supplies, and is named by Builders FirstSource itself as one of its largest competitors.

US LBM Holdings, LLCNot tracked

A privately owned national distributor of building materials to professional builders and remodelers, competing yard by yard with Builders FirstSource across the same US residential construction markets.

Carter Lumber CompanyNot tracked

A private lumberyard and building-components chain in the Midwest and Southeast selling lumber, millwork and manufactured components to the same professional builder customers.

Balance Sheet & Liquidity

Revenue

$14.45B

Trailing 12 months (through 6/30/2026)

Net Income

$103M

Trailing 12 months (through 6/30/2026)

Free Cash Flow

$853M

Total Equity

$4.35B

Total Liabilities

$6.89B

Current Ratio

1.79

Interest Coverage

-

Debt/EBITDA

3.80

Earnings Per Share

Revenue & Net Income

Free Cash Flow

Income Breakdown

Historical statement

Margins over time

Debt over time

How heavy the debt is

Growth grid

Growth — Revenue

Fair Value Estimation

General caseUndervalued

Fair Value

$139.23

Current Price

$57.01

Margin of Safety

+59.1%

Fair Value Range

$90.50 - $187.96

Spread across the valuation methods used, not a statistically calibrated confidence interval.

Estimation Methods

Analyst price target:$80.62
Discounted cash flow (DCF):$417.16
Earnings multiple (P/E):$17.10
Graham growth formula:$19.67
Earnings power value (EPV):$25.84
Justified P/B:Not enough data to compute it
Dividend discount (Gordon):Not enough data to compute it
P/FFO, funds from operations:$152.66
Mid-cycle earnings:$118.22
Revenue multiple:$382.00
Analyst Consensus:Buy (17B / 15H / 1S)
Last Earnings Surprise:-9.51%

Valuation Metrics

P/E Ratio

61.97

ROE

10.0%

P/B Ratio

1.53

P/FCF

9.59

Gross Margin

29.2%

ROIC

3.6%

Profitability Radar

Value Creation (Economic Moat)

ROIC

3.6%

WACC

6.7%

ROIC − WACC

-3.1 pp

ROIC is below the cost of capital — the company is destroying value for every dollar invested.

Fundamental Analysis Criteria

Passed (14)

  • EPS shows upward trend
  • Price CAGR 18.60%
  • P/FCF 9.59
  • P/B Ratio 1.53
  • Debt/Equity ratio
  • Positive Free Cash Flow
  • Current Ratio
  • Debt/EBITDA
  • DCF valuation (Undervalued)
  • Revenue Growth 5Y 12.2%
  • Analyst Consensus 52% Buy
  • Earnings Quality (OCF/NI) 8.76
  • Share Dilution -6.0%
  • Piotroski F-Score 5/9

Failed (11)

  • ROIC 3.6%
  • Gross Margin 29.2%
  • Operating Margin 3.0%
  • CapEx intensity
  • Return on Tangible Assets
  • Low reliance on intangibles
  • Price below Graham Number
  • ROE 2.5%
  • Earnings Surprise avg -9.2%
  • PEG Ratio 7.67
  • Net Margin Trend 0.7% vs 4.7%

Unavailable (2)

  • Dividend Payout NaN%
  • Interest Coverage

Piotroski F-Score

5/9

Mixed signals: some areas need attention

score
criteria

Earnings Quality

8.76

High quality: earnings backed by cash

Share Dilution

-6.0%

Buying back shares. Shareholder friendly

Institutional Holdings

Governance

Executive Team

NameTitleAge
Mr. Peter M. Jackson CPAPresident, CEO & Director53
Mr. Pete R. BeckmannExecutive VP & CFO47
Mr. Stephen J. HerronChief Operating Officer66
Mr. Michael HillerChief Talent Officer51
Mr. Matthew TresterVP, Controller & Principal Accounting Officer-
Mr. Mike McCranieChief Information Officer-
Ms. Heather Anne Kos CPASenior Vice President of Investor Relations54
Ms. Alena S. BrennerExecutive VP, Chief Legal Officer & Corporate Secretary48
Mr. Matthew Coley O'BrienEVP & Chief Human Resources Officer51
Ms. Jami Beckmann CoulterSenior Vice President of the Strategic Management Office48

Audit Risk

6

Board Risk

6

Compensation Risk

1

Shareholder Rights Risk

8

Part 2 · The price and when to enter

This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.

Documents

  • Annual Report (10-K)

    A yearly overview of the business, its financial results, and the risks it faces.

    Filed on 2026-02-17

    View document
  • Quarterly Report (10-Q)

    A snapshot of financial performance for the most recent three-month period.

    Filed on 2026-07-30

    View document
  • Current Report (8-K)

    An announcement of a major event, such as a leadership change or big news.

    Filed on 2026-08-07

    View document

via SEC EDGAR

Income History

via SEC EDGAR

Latest News

Recent headlines for BLDR, sourced from Markets Gazette.

No recent news for BLDR.