BLDR
Builders FirstSource, Inc.
$51.75
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 68.3% below fair value
You pay
$51.75
Bear
$126.84
Fair
$163.08
Bull
$199.32
Bear
$126.84
+145.1%
$9.06 × 14x
Fair
$163.08
+215.1%
$9.06 × 18x
Bull
$199.32
+285.2%
$9.06 × 22x
Adjust Assumptions
18.0x
9.06$
Key Value Driver
Through-cycle normalized EPS ($9.06)
Implied Market Multiple
5.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (44 analysts)
$79.71
Divergence from AlphaVal
105%
Summary
Using 7-year normalized EPS of $9.06 at a 18x cycle multiple, the base-case value is $163.08 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $79.71 (from 44 analysts). Our estimate is 105% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing