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Should Value Investors Buy Builders FirstSource (BLDR) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Builders FirstSource (BLDR - Free Report) . BLDR is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 14.18. This compares to its industry's average Forward P/E of 18.51. Over the last 12 months, BLDR's Forward P/E has been as high as 14.88 and as low as 3.62, with a median of 10.52.

Finally, investors will want to recognize that BLDR has a P/CF ratio of 6.82. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. BLDR's current P/CF looks attractive when compared to its industry's average P/CF of 13.62. Over the past 52 weeks, BLDR's P/CF has been as high as 6.82 and as low as 2.57, with a median of 3.59.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Builders FirstSource is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BLDR feels like a great value stock at the moment.


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