Head-To-Head Review: Builders FirstSource (NASDAQ:BLDR) and Lowe's Companies (LOW)

Lowe's Companies (NYSE: LOW) and Builders FirstSource (NASDAQ:BLDR) are both retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.

Institutional and Insider Ownership

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73.8% of Lowe's Companies shares are owned by institutional investors. Comparatively, 98.0% of Builders FirstSource shares are owned by institutional investors. 0.1% of Lowe's Companies shares are owned by company insiders. Comparatively, 14.6% of Builders FirstSource shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Lowe's Companies and Builders FirstSource, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lowe's Companies 0 9 23 0 2.72
Builders FirstSource 0 2 8 0 2.80

Lowe's Companies presently has a consensus target price of $98.36, suggesting a potential upside of 13.83%. Builders FirstSource has a consensus target price of $23.35, suggesting a potential upside of 18.47%. Given Builders FirstSource’s stronger consensus rating and higher possible upside, analysts plainly believe Builders FirstSource is more favorable than Lowe's Companies.

Earnings and Valuation

This table compares Lowe's Companies and Builders FirstSource’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lowe's Companies $68.62 billion 1.05 $3.45 billion $4.39 19.68
Builders FirstSource $7.03 billion 0.32 $38.78 million $1.27 15.52

Lowe's Companies has higher revenue and earnings than Builders FirstSource. Builders FirstSource is trading at a lower price-to-earnings ratio than Lowe's Companies, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lowe's Companies and Builders FirstSource’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lowe's Companies 5.02% 65.17% 10.10%
Builders FirstSource 0.55% 39.79% 4.81%

Dividends

Lowe's Companies pays an annual dividend of $1.64 per share and has a dividend yield of 1.9%. Builders FirstSource does not pay a dividend. Lowe's Companies pays out 37.4% of its earnings in the form of a dividend. Lowe's Companies has raised its dividend for 55 consecutive years.

Risk & Volatility

Lowe's Companies has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500. Comparatively, Builders FirstSource has a beta of 2.05, indicating that its stock price is 105% more volatile than the S&P 500.

Summary

Lowe's Companies beats Builders FirstSource on 11 of the 17 factors compared between the two stocks.

Lowe's Companies Company Profile

Lowe's Companies, Inc. operates as a home improvement company in the United States, Canada, and Mexico. It offers a line of products for maintenance, repair, remodeling, and decorating. The company provides home improvement products in various categories, such as lumber and building materials, tools and hardware, appliances, fashion fixtures, rough plumbing and electrical, seasonal living, lawn and garden, paint, millwork, flooring, kitchens, outdoor power equipment, and home fashions. It also offers installation services through independent contractors in various product categories; extended protection plans; and in-warranty and out-of-warranty repair services. The company sells its national brand-name merchandise and private branded products to homeowners, renters, and professional customers; and retail customers comprising individual homeowners and renters. As of March 24, 2017, it operated 2,365 home improvement and hardware stores. The company also sells its products through online sites comprising Lowes.com and Lowesforpros.com; and through mobile applications. Lowe's Companies, Inc. was founded in 1946 and is headquartered in Mooresville, North Carolina.

Builders FirstSource Company Profile

Builders FirstSource, Inc. manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. The company operates through four segments: Northeast, Southeast, South, and West. Its products include lumber and lumber sheet goods comprising dimensional lumber, plywood, and OSB products that are used in on-site house framing; and windows, and interior and exterior door units, as well as interior trims and custom products under the Synboard brand. The company's manufactured products consist of wood floor and roof trusses, steel roof trusses, wall panels, stairs, and engineered wood; gypsum, roofing, and insulation products, including wallboards, ceilings, joint treatments, and finishes, as well as vinyl, composite, and wood sidings; and exterior trims, other exteriors, metal studs, and cement products. In addition, it offers other building products and services, such as cabinets and hardware, as well as turn-key framing, shell construction, design assistance, and professional installation services. Further, the company supplies professional grade building products, such as lumber and lumber sheet goods, and various windows, doors, and millwork lines. 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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