BLDR
Builders FirstSource, Inc.
$75.16
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 40.2% below fair value
You pay
$75.16
Bear
$92.16
Fair
$125.68
Bull
$159.19
Bear
$92.16
+22.6%
$9.06 × 14x + net cash
Fair
$125.68
+67.2%
$9.06 × 18x + net cash
Bull
$159.19
+111.8%
$9.06 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($9.06)
Implied Market Multiple
8.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $101.82 from 43 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $125.68 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 $101.82 (from 43 analysts). Our estimate is 33% 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