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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 faces challenges due to ongoing construction weakness and falling lumber prices, which are pressuring margins and earnings. The company's value-added and commodity segments are experiencing declining sales, and leverage is rising. According to a recent report, no meaningful recovery is expected until at least 2026. Additionally, institutional investors such as Asset Management One Co. Ltd. and Oppenheimer Asset Management Inc. have reduced their stakes in the company. Builders FirstSource's Q3 2025 earnings call revealed a cautious outlook.

1.c. Company Highlights

2. Builders FirstSource's Q3 2025 Earnings: A Strong Performance Amidst a Weak Housing Market

Builders FirstSource reported net sales of $3.9 billion for Q3 2025, a decrease of 6.9% year-over-year, driven by lower organic sales and commodity deflation. The company's gross profit was $1.2 billion, down 13.5% compared to the prior year period, with a gross margin of 30.4%. Adjusted EBITDA was $434 million, down approximately 31%, with an adjusted EBITDA margin of 11%. The company generated $548 million in operating cash flow and $465 million in free cash flow. The actual EPS came out at $1.88, beating estimates of $1.75.

Publication Date: Nov -16

📋 Highlights
  • Net Sales & Profit Decline:: Q3 net sales fell 6.9% to $3.9B; gross profit dropped 13.5% to $1.2B with a 30.4% margin.
  • Adjusted EBITDA Drop:: Adjusted EBITDA declined 31% to $434M (11% margin), reflecting housing market weakness and cost pressures.
  • Strong Cash Flow Generation:: Generated $548M operating cash flow and $465M free cash flow despite market challenges.
  • Strategic M&A Activity:: Deployed $100M+ in acquisitions (e.g., St. George Truss, Builders Door & Trim) to expand geographies and value-added offerings.
  • 2025 Guidance:: Forecasts $15.1–15.4B sales, $1.625–1.675B EBITDA, and 10.6–11.1% EBITDA margin amid recovery expectations.

Financial Performance and Guidance

The company's financial performance was impacted by the weak housing market, but it remains focused on executing its strategy and maintaining financial flexibility. For 2025, Builders FirstSource guides net sales in the range of $15.1 billion to $15.4 billion, with an adjusted EBITDA of $1.625 billion to $1.675 billion and an adjusted EBITDA margin of 10.6% to 11.1%. The company expects a gross margin of 30.1% to 30.5% and free cash flow of $800 million to $1 billion.

Valuation Metrics

To understand what's priced in, we can look at Builders FirstSource's valuation metrics. The company has a P/E Ratio of 19.25, P/B Ratio of 2.65, P/S Ratio of 0.73, EV/EBITDA of 7.35, and Free Cash Flow Yield of 8.92%. These metrics suggest that the company is reasonably valued, with a good balance between growth and profitability.

Operational Highlights

Builders FirstSource continued to invest in value-added solutions, including opening a new millwork location and expanding/upgrading plants in 7 states. The company also deployed over $100 million toward return-enhancing opportunities, including acquisitions and share repurchases. The company acquired St. George Truss Company, Builders Door & Trim, and Rystin Construction, strengthening its position in desirable geographies.

Outlook and Strategy

The company remains focused on executing its strategy, leveraging its exceptional platform, and maintaining financial flexibility to drive long-term growth. Builders FirstSource held an Investor Day, outlining plans based on current performance and future assumptions. The market is currently weak, but a recovery is expected to drive significant improvements in financials. The company's long-term normalized margin assumption remains in the high teens, with a contribution margin of over 20% in the 2026 scenario.

Growth Drivers

The company views its value-added services, such as install and digital initiatives, as key growth drivers. The specialty building products category has been steady, driven by install growth and stable cost and sales trends. The company expects digital initiatives and install to continue driving growth above market, alongside its value-added products.

3. NewsRoom

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Builders FirstSource, Inc. $BLDR Shares Sold by Fisher Asset Management LLC

Dec -04

Source: defenseworld.net

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Builders FirstSource, Inc. (NYSE:BLDR) Receives Consensus Rating of “Hold” from Analysts

Dec -04

Source: defenseworld.net

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Boston Partners Sells 517,387 Shares of Builders FirstSource, Inc. $BLDR

Nov -27

Source: defenseworld.net

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Campbell & CO Investment Adviser LLC Buys 1,322 Shares of Builders FirstSource, Inc. $BLDR

Nov -17

Source: defenseworld.net

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Builders FirstSource: No Recovery In Sight

Nov -13

Source: seekingalpha.com

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Builders FirstSource, Inc. $BLDR Shares Bought by Teacher Retirement System of Texas

Nov -04

Source: defenseworld.net

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Builders FirstSource: Foundation Looks Weak Despite Earnings Beat

Nov -03

Source: benzinga.com

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Builders FirstSource: Building A New Position May Work Despite Evident Technical Risks (Rating Upgrade)

Nov -02

Source: seekingalpha.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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Beacon Roofing Supply

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Builders FirstSource

A-Score: 4.4/10

Value: 5.7

Growth: 8.4

Quality: 6.2

Yield: 0.0

Momentum: 1.5

Volatility: 4.3

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Quality: 6.6

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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

110.01$

Current Price

110.01$

Potential

-0.00%

Expected Cash-Flows