Yahoo Finance BLDR vs. HD: Which Stock Is the Better Value Option?
Investors interested in Building Products - Retail stocks are likely familiar with Builders FirstSource (BLDR) and Home Depot (HD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Builders FirstSource is sporting a Zacks Rank of #2 (Buy), while Home Depot has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BLDR is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
BLDR currently has a forward P/E ratio of 14.17, while HD has a forward P/E of 24.10. We also note that BLDR has a PEG ratio of 1.20. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HD currently has a PEG ratio of 2.45.
Another notable valuation metric for BLDR is its P/B ratio of 4.96. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HD has a P/B of 354.25.
Based on these metrics and many more, BLDR holds a Value grade of A, while HD has a Value grade of C.
BLDR has seen stronger estimate revision activity and sports more attractive valuation metrics than HD, so it seems like value investors will conclude that BLDR is the superior option right now.
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Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
