On Tuesday, Home Depot (NYSE:HD) confirmed that it's finally giving up on selling building supplies to contractors wholesale. After Lehman Brothers (NYSE:LEH) conducted an auction among at least two competing teams of buyers, "Big Orange" agreed yesterday to sell its supply unit for $10.3 billion to a group of investors comprised of Bain Capital, Carlyle Group, and Clayton, Dubilier & Rice.

Investors will probably be disappointed with this outcome. In the days leading up to the auction, some analysts bandied about estimates of as much as $14 billion for the final price tag. Receiving $0.74 on the expected dollar is unlikely to put a smile on shareholders' faces. But those investors may simply count themselves lucky to be quit of a business that was generating just 6.6% pre-tax margins. They can always take the cash and plow it back into the retail side of the business, with an operating margin greater than 11.4%.

When all the restructuring costs and write-offs are worked out, Home Depot might even emerge from this transformational event with an operating margin exceeding archrival Lowe's (NYSE:LOW) 10.7%, instead of its current laggardly 10.2%.

That said, I don't think Home Depot, a Motley Fool Inside Value recommendation, is the real story here. Instead, I think the focus should be on its fellow Inside Value pick and building supplies vendor, Builders FirstSource (NASDAQ:BLDR).

Just ponder a few numbers:

Home Depot Supply

Builders FirstSource

Annual sales

$12.1 billion

$2.1 billion

Market cap

$10.3 billion

$580 million

Price-to-sales ratio



Operating margin



All data courtesy of Capital IQ. Home Depot Supply figures based on January trailing-12-months data; Builders FirstSource figures based on December 2006 trailing-12-months data.

Do you see what I see? Sure, HD Supply gets about 18% more pre-tax profit per dollar of sales than Builders does. It's also got advantages of scale, since it's bigger than the next four biggest players in the industry combined: Builders, privately owned 84 Lumber, Stock Building Supply, and The Strober Organization. All the same, HD Supply's sale price seems to sport a far richer multiple than the one Mr. Market's currently giving Builders.

The more I look at these numbers, the more I agree with Inside Value lead analyst Philip Durell: Builders FirstSource offers "growth at an unreasonably low price." (To find out why we think so, try the newsletter out for 30 days -- free of charge -- and read Philip's write-up on this pint-sized Home Depot look-alike.)

Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.