Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, building products supplier Builders FirstSource (Nasdaq: BLDR ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Builders FirstSource's business and see what CAPS investors are saying about the stock right now.
Builders FirstSource facts
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Headquarters (founded)
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Dallas, Texas (1998)
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Market Cap
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$160.8 million
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Industry
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Building products
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TTM Revenue
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$938.5 million
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Management
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CEO Floyd Sherman (since 2001)
CFO Charles Horn (since 2000)
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Return on Capital (average, last three years)
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0.8%
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Year-to-Date Return
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195%
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Cash/Debt
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$102.6 million/$319.2 million
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Competitors
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Home Depot (NYSE: HD )
Lowe's (NYSE: LOW )
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CAPS members bearish on BLDR also bearish on
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Lennar (NYSE: LEN )
Hovnanian (NYSE: HOV )
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CAPS members bullish on BLDR also bullish on
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General Electric (NYSE: GE )
Apple (Nasdaq: AAPL )
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Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.
Over on CAPS, fully 49 of the 261 members who have rated Builders FirstSource -- some 18% -- believe the stock will underperform the S&P 500 going forward. These bears include investoreagle and All-Star TSIF, who is ranked in the top 1% of our community.
Just last week, investoreagle brilliantly boiled the bear case down to six simple words: "Housing glut is a huge problem."
In a pitch from the same day, TSIF builds on that bearishness:
While Builders FirstSource is well respected in the industry and ten years of experience, and Builders has/had decent cash on hand, the losses it continues to take are not sustainable, and certainly not worth the 2X book value it currently has. Revenue is less than half it was two years ago and continues dropping sharply quarter to quarter. Typically when your debt is 3X your cash on hand, the cash is needed to help secure the covenants when inventory is not sufficient. Builders has been working off inventory and the cash it held shows that it planned well for the recession, but the recession appears to be outlasting it. ...
Until the new home inventory burns off, the credit market improves, and foreclosures stop getting dumped on the market well below new build cost Builders will have a tough time shining, unless they install a lot of sunlights.
What do you think about Builders FirstSource, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.
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