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1. Company Snapshot

1.a. Company Description

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.

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1.b. Last Insights on BLDR

Builders FirstSource's recent performance was driven by increased investor interest, with shares trading at higher volumes. The company's strong position in the market was noted, with a consensus rating of "Hold" from analysts. Despite a decrease in net sales, the company's growth from acquisitions and commodity deflation had a positive impact. Additionally, institutional investors such as Caprock Group LLC and AYAL Capital Advisors Ltd acquired new stakes in the company. However, Fisher Asset Management LLC and Assenagon Asset Management S.A. reduced their holdings. The company's Q4 2025 earnings call and financial outlook are expected to provide further insights.

1.c. Company Highlights

2. Builders FirstSource Posts Mixed Q4 Results Amidst Challenging Housing Market

Builders FirstSource reported a decline in its fourth-quarter 2025 financial performance, with net sales decreasing 12% to $3.4 billion, driven by lower core organic sales and commodity deflation. Gross profit was $1 billion, a decrease of 19% compared to the prior year period, resulting in a gross margin of 29.8%, down 250 basis points. Adjusted EPS was $1.12, a decrease of 52% compared to the prior year, missing analyst estimates of $1.3.

Publication Date: Feb -19

📋 Highlights
  • 2025 Sales Decline: Net sales fell 12% to $3.4 billion due to weaker housing market and commodity deflation.
  • Gross Margin Pressure: Gross margin dropped 250 bps to 29.8%, driven by lower sales and operational leverage.
  • EBITDA Drop: Adjusted EBITDA fell 44% to $275 million, with margin at 8.2% (470 bps decline YoY).
  • 2026 Guidance: Net sales projected at $14.8–$15.8 billion; adjusted EBITDA of $1.3–$1.7 billion (8.8–10.8% margin).
  • Capital Investments: $110 million allocated to expand value-added operations and acquisitions like Pleasant Valley Homes.

Financial Performance

The company's adjusted EBITDA was $275 million, down approximately 44%, primarily driven by lower gross profit. Adjusted EBITDA margin was 8.2%, down 470 basis points from the prior year, primarily due to lower gross profit margins and reduced operating leverage. For the full year 2025, the company maintained a gross margin above 30% and an EBITDA margin above 10%, reflecting its operational excellence and strategic investments.

Guidance and Outlook

For 2026, Builders FirstSource guided net sales in the range of $14.8 billion to $15.8 billion, adjusted EBITDA of $1.3 billion to $1.7 billion, and adjusted EBITDA margin in the range of 8.8% to 10.8%. The company expects its 2026 full year gross margin to be in the range of 28.5% to 30%. Analysts estimate next year's revenue growth at 6.7%.

Valuation Metrics

Using the current valuation metrics, the company's P/E Ratio is 28.94, P/B Ratio is 2.89, and EV/EBITDA is 14.73. The 'Free Cash Flow Yield (%)' is 8.1%, indicating a relatively attractive cash return for investors. The 'Net Debt / EBITDA' ratio is 4.46, suggesting a manageable debt burden.

Operational Highlights

Builders FirstSource is investing in key areas, including innovation, technology, and digital transformation. The company is also exploring opportunities in modular housing, including the acquisition of Pleasant Valley Homes, a factory-built HUD modular business. Peter Jackson stated that the year is expected to be modest in all categories, with the dynamic in '25 coming in hot and ending slowly.

Strategic Initiatives

The company is committed to managing capital with rigor, driving for organic growth and productivity, and pursuing M&A. With a fortress balance sheet and strong free cash flow through the cycle, Builders FirstSource remains well-situated to compound value through its strategic initiatives. The acquisition of Pleasant Valley Homes is a strategic move into modular housing, with the company interested in exploring partnerships with its builder customers to offer manufactured modular high-quality homes.

3. NewsRoom

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Builders FirstSource, Inc. $BLDR Position Boosted by Fiera Capital Corp

Feb -20

Source: defenseworld.net

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Builders FirstSource's Q4 Earnings & Sales Lag, Margins Down Y/Y

Feb -17

Source: zacks.com

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Builders FirstSource, Inc. (BLDR) Q4 2025 Earnings Call Transcript

Feb -17

Source: seekingalpha.com

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Builders FirstSource (BLDR) Lags Q4 Earnings and Revenue Estimates

Feb -17

Source: zacks.com

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Builders FirstSource Reports Fourth Quarter and Full-Year 2025 Results; Provides 2026 Financial Outlook

Feb -17

Source: businesswire.com

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Caprock Group LLC Acquires Shares of 10,213 Builders FirstSource, Inc. $BLDR

Feb -15

Source: defenseworld.net

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Here's What You Must Know Ahead of Builders FirstSource's Q4 Earnings

Feb -12

Source: zacks.com

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Builders FirstSource (BLDR) Sees a More Significant Dip Than Broader Market: Some Facts to Know

Feb -11

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.60%)

6. Segments

Manufactured Products

Expected Growth: 6.5%

The 6.5% growth in Manufactured Products from Builders FirstSource, Inc. is driven by increasing demand for single-family housing, repair and remodeling activities, and a shift towards value-added products. Additionally, strategic acquisitions, operational efficiencies, and a strong supplier network contribute to the segment's growth.

Windows, Doors and Millwork

Expected Growth: 6.8%

The 6.8% growth in Windows, Doors, and Millwork from Builders FirstSource, Inc. is driven by increasing demand for new single-family homes, repair and remodeling activities, and a shift towards energy-efficient products. Additionally, the company's strategic acquisitions, expanded product offerings, and strong relationships with builders and contractors contribute to the segment's growth.

Lumber and Lumber Sheet Goods

Expected Growth: 6.2%

The 6.2% growth in Lumber and Lumber Sheet Goods from Builders FirstSource, Inc. is driven by increasing demand for new single-family homes, repair and remodeling activities, and rising prices due to supply chain constraints and tariffs on imported lumber. Additionally, the company's strategic acquisitions and operational efficiencies have contributed to the segment's growth.

Specialty Building Products and Services

Expected Growth: 6.9%

The 6.9% growth in Specialty Building Products and Services from Builders FirstSource, Inc. is driven by increasing demand for value-added products, strong relationships with national builders, and a growing presence in the repair and remodel market. Additionally, the company's strategic acquisitions and investments in operational efficiency have contributed to the segment's growth.

7. Detailed Products

Lumber and Building Materials

A wide range of lumber and building materials, including dimensional lumber, engineered wood products, and specialty lumber

Roofing and Siding

Roofing materials, including asphalt shingles, metal roofing, and clay tiles, as well as siding products like vinyl, fiber cement, and stucco

Windows and Doors

A variety of windows and doors, including vinyl, aluminum, and wood products, as well as patio doors and skylights

Millwork and Doors

Interior and exterior doors, as well as millwork products like molding, trim, and stair parts

Manufactured Housing and Modular Construction

Factory-built housing and modular construction products, including single-family homes, apartments, and commercial buildings

Engineered Wood Products

Engineered wood products, including glue-laminated timber, laminated veneer lumber, and oriented strand board

Trusses and Wall Panels

Pre-fabricated trusses and wall panels, designed to simplify and accelerate the construction process

8. Builders FirstSource, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Builders FirstSource, Inc. is medium due to the availability of alternative building materials and suppliers. While the company has a strong market presence, customers may still opt for alternative products or suppliers, posing a moderate threat.

Bargaining Power Of Customers

The bargaining power of customers for Builders FirstSource, Inc. is low due to the company's strong relationships with its customers and its ability to provide customized solutions. Customers have limited bargaining power, and the company has a strong negotiating position.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Builders FirstSource, Inc. is medium due to the company's dependence on a few large suppliers. While the company has some negotiating power, suppliers may still exert some influence over prices and delivery terms.

Threat Of New Entrants

The threat of new entrants for Builders FirstSource, Inc. is low due to the high barriers to entry in the industry, including significant capital requirements and regulatory hurdles. New entrants would face significant challenges in competing with established players like Builders FirstSource.

Intensity Of Rivalry

The intensity of rivalry for Builders FirstSource, Inc. is high due to the competitive nature of the industry. The company operates in a highly competitive market with several established players, leading to intense competition for market share and pricing pressure.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.92%
Debt Cost 6.66%
Equity Weight 59.08%
Equity Cost 14.35%
WACC 11.20%
Leverage 69.27%

11. Quality Control: Builders FirstSource, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Quality: 6.8

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Builders FirstSource

A-Score: 4.5/10

Value: 6.1

Growth: 8.3

Quality: 6.2

Yield: 0.0

Momentum: 1.5

Volatility: 4.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

110.55$

Current Price

110.55$

Potential

-0.00%

Expected Cash-Flows