Builders FirstSource Stock: Is BLDR Underperforming the Industrial Sector?

Valued at a market cap of $11.8 billion, Builders FirstSource, Inc. (BLDR) manufactures and supplies building materials, manufactured components, and construction services. The Irving, Texas-based company serves its products to production builders and small custom homebuilders, as well as multi-family builders, repair and remodeling contractors, and light commercial contractors.

Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and BLDR fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the building products and equipment industry. The company’s strengths lie in its industry-leading scale, extensive geographic footprint, and highly diversified product and service portfolio, which allow it to serve a wide range of customers. Its vertically integrated operations and advanced digital solutions further enhance customer experience and operational efficiency. 

This building materials manufacturer has dipped 47.4% from its 52-week high of $203.14, reached on Sep. 19, 2024. Moreover, shares of BLDR have declined 16.3% over the past three months, considerably lagging behind the Industrial Select Sector SPDR Fund’s (XLI) 7.8% uptick during the same time frame.

In the longer term, BLDR has fallen 28.5% over the past 52 weeks, significantly underperforming XLI’s 15.5% rise over the same time frame. Moreover, on a YTD basis, shares of BLDR are down 25.2%, compared to XLI’s 7.9% return. 

To confirm its bearish trend, BLDR has been trading below its 200-day moving average since early December, 2024, and has remained below its 50-day moving average since late October, 2024, with slight fluctuations. 

On May 1, shares of BLDR plunged 6.4% after its mixed Q1 earnings release. Due to weaker core organic sales, one fewer selling days, and commodity deflation, the company’s overall revenue declined 6% year-over-year to $3.7 billion, marginally missing the consensus estimates. On the other hand, its adjusted EPS of $1.51 fell 43% from the year-ago quarter but topped the analyst expectations by a penny. Lower gross and operating profit margins coupled with a 31.7% year-over-year drop in its adjusted EBITDA to $369.2 million negatively impacted its profitability. 

BLDR has also lagged behind its rival, Masco Corporation (MAS), which declined  12.2% over the past 52 weeks and 16.1% on a YTD basis. 

Despite BLDR’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 19 analysts covering it, and the mean price target of $143.74 suggests a 34.5% premium to its current price levels.