Builders FirstSource, Inc.

BLDR Details

Builders FirstSource, Inc. (NASDAQ: BLDR) is the nation’s largest supplier of structural building products, value-added components, and services to the professional market for single-family and multi-family construction and repair and remodelling.

Financial Results for Q3 FY22

• The net sales increased marginally to USD 5.76 bn in Q3 FY22 as compared to the net sales of USD 5.50 bn in Q3 FY21. The company achieved increased net sales in all of the product categories, except lumber and lumber sheet goods, mainly due to core organic sales growth as well as acquisitions.
• The adjusted EBITDA increased to USD 1.2 bn in Q3FY22. Its robust balance sheet as well as ample liquidity provide financial flexibility.

Key Updates

• On 10 January 2023, the company announced that Dave Rush has been named as the Chief Executive Officer, from immediate effect.
• On 28 November 2022, the company stated that its Board of Directors approved an increase to its existing stock repurchase plan in the amount of $1 billion, for the total of approximately USD1.5 Bn.

Outlook

The company stated that the total net sales is expected to be between USD 22.5 bn and USD 23 bn for FY22. The total Adjusted EBITDA is estimated to range from USD 4.2 bn to USD 4.4 bn and the total adjusted EBITDA margin to be close to 18.5% to 19.5% for FY22.

Key Risks

The company is exposed to the risks related to adverse changes in demographics or economic conditions.  Also, the building products supply industry is competitive.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

The stock has been valued using EV/Sales multiple-based illustrative relative valuation, and the target price so arrived reflects a fall of low double-digit (in % terms). A slight discount has been applied to EV/Sales Multiple (NTM) (Peer Average) considering the current trading levels and risks associated.

Resultantly, it is prudent to liquidate the stock at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the closing price of USD 77.330 per share, up by 2.18% as of 27^th January 2023.

Technical Overview:

Daily Price Chart

Builders FirstSource, Inc. (BLDR) is a part of Kalkine’s Global Big Money Product.

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for share price chart and stock valuation is based on January 27, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.