Value
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.4 |
| P/S | 10.0 |
| EV/EBITDA | 5.2 |
| Fwd P/E | 8.7 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 13.0x
- ▸PEG: 0.10
- ▸Attractively valued
BLDR · Why this verdict
Why Builders FirstSource (BLDR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Builders FirstSource faces a convergence of negative signals: revenue declining at -10%, two consecutive earnings misses in the most recent quarters, a confirmed price downtrend, and an overall business quality score that has fallen below the minimum threshold. The stock screens inexpensive on a forward P/E of 13.2x and PEG of 0.11, but the valuation discount reflects deteriorating fundamentals rather than a mispricing.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is declining at -10%, a meaningful contraction that has not yet stabilized and puts upward pressure on the cost structure while compressing operating leverage across the business. Growth breakdown | Revenue growth turns positive on a year-over-year basis for 2 consecutive reported quarters, signaling the contraction has troughed. | →Stable |
| CounterMuch of the revenue decline may be cyclical rather than structural; a recovery in housing or construction activity could restore the top line without any permanent impairment to the business model. | ||
The two most recent reported quarters produced back-to-back misses — a -12.3% miss in February 2026 followed by a -27.6% miss in the most recent quarter — reversing the beat pattern from the two older periods and suggesting the business is tracking below expectations on a fundamental basis. Catalyst breakdown | EPS surprise exceeds 5% positive for 2 consecutive reported quarters, reversing the recent miss pattern. | →Stable |
| CounterThe two older quarters in the trailing four-quarter set both produced beats; if the misses reflect a temporary transition rather than a structural step-down, the pattern can reverse once the comparison base resets. | ||
The stock is below its 200-day moving average with the average itself declining at -7.8% over 30 days — a confirmed downtrend — while the options market shows a put/call ratio of 2.30, reflecting an unusually high level of defensive positioning. Momentum breakdown | Price closes above the 200-day moving average for 20 or more consecutive trading days and the put/call ratio falls below 1.5, signaling a trend reversal. | →Stable |
| CounterMACD is improving and RSI has reached 58, suggesting price momentum is no longer deteriorating; the confirmed downtrend label may be near a turning point even without formal reversal confirmation. | ||
Despite a forward P/E of 13.2x and PEG of 0.11 that appear inexpensive, the overall business quality score has breached the minimum acceptable threshold at 3.8 (below the 4.0 floor), meaning the apparent value discount is accompanied by below-par fundamental quality that limits investability. Warnings | Business quality score rises above 4.0 for 2 consecutive evaluations as earnings stabilize and the fundamental picture improves. | →Stable |
| CounterFree cash flow converts at 220% of net income — a high cash conversion rate — suggesting the cash economics of the business may be stronger than the quality score alone implies, and a recovery in operating results could quickly improve quality metrics. | ||
Revenue is declining at -10%, a meaningful contraction that has not yet stabilized and puts upward pressure on the cost structure while compressing operating leverage across the business.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive on a year-over-year basis for 2 consecutive reported quarters, signaling the contraction has troughed.
CounterMuch of the revenue decline may be cyclical rather than structural; a recovery in housing or construction activity could restore the top line without any permanent impairment to the business model.
The two most recent reported quarters produced back-to-back misses — a -12.3% miss in February 2026 followed by a -27.6% miss in the most recent quarter — reversing the beat pattern from the two older periods and suggesting the business is tracking below expectations on a fundamental basis.
→StableCatalyst breakdown
- Expectation
- EPS surprise exceeds 5% positive for 2 consecutive reported quarters, reversing the recent miss pattern.
CounterThe two older quarters in the trailing four-quarter set both produced beats; if the misses reflect a temporary transition rather than a structural step-down, the pattern can reverse once the comparison base resets.
The stock is below its 200-day moving average with the average itself declining at -7.8% over 30 days — a confirmed downtrend — while the options market shows a put/call ratio of 2.30, reflecting an unusually high level of defensive positioning.
→StableMomentum breakdown
- Expectation
- Price closes above the 200-day moving average for 20 or more consecutive trading days and the put/call ratio falls below 1.5, signaling a trend reversal.
CounterMACD is improving and RSI has reached 58, suggesting price momentum is no longer deteriorating; the confirmed downtrend label may be near a turning point even without formal reversal confirmation.
Despite a forward P/E of 13.2x and PEG of 0.11 that appear inexpensive, the overall business quality score has breached the minimum acceptable threshold at 3.8 (below the 4.0 floor), meaning the apparent value discount is accompanied by below-par fundamental quality that limits investability.
→StableWarnings
- Expectation
- Business quality score rises above 4.0 for 2 consecutive evaluations as earnings stabilize and the fundamental picture improves.
CounterFree cash flow converts at 220% of net income — a high cash conversion rate — suggesting the cash economics of the business may be stronger than the quality score alone implies, and a recovery in operating results could quickly improve quality metrics.
Per-dimension breakdown
Quality
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.3 |
| ROA | 2.3 |
| Gross margin | 2.0 |
| Op margin | 0.2 |
| Net margin | 1.0 |
| Current ratio | 6.3 |
| FCF quality | 10.0 |
| Moat | 3.1 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 220% FCF/NI
- ▸No competitive moat
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 10.0 |
- ▸Declining revenue: -10%
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.4 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 5.2 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -8.2%/30d — confirmed downtrend
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.5 |
| Analyst rating | 7.5 |
| Price target | 7.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $390,850 (0.005% of mkt cap)
Peer rank
2.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.2 |
| quality rank | 1.6 |
| growth rank | 1.1 |
Technical
1.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.7 |
| 52w position | 1.3 |
| gap | 4.0 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.1 |
| days to cover | 8.2 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 2.7 |
| beta | 5.2 |
| debt equity | 4.4 |
- ▸High IV: 64%
Catalyst
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.2<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=6.9>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.17
Upside
+2.6%
Downside
15.0%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 66
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.45>1.3
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.4 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:0.2<1.5@spot.
The strongest dimensions are Value at 7.4, Momentum at 6.9, and Sentiment at 6.7; the weakest are Technical at 1.5, Peer rank at 2.5, and Quality at 3.8. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.17 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Revenue is declining at -10%, a meaningful contraction that has not yet stabilized and puts upward pressure on the cost structure while compressing operating leverage across the business.
Trip ifRevenue growth turns positive (above 0%) year-over-year for 2 consecutive reported quarters.
- P2The two most recent reported quarters produced back-to-back misses — a -12.3% miss in February 2026 followed by a -27.6% miss in the most recent quarter — reversing the beat pattern from the two older periods and suggesting the business is tracking below expectations on a fundamental basis.
Trip ifEPS surprise exceeds 5% for 2 consecutive reported quarters, reversing the miss streak.
- P3The stock is below its 200-day moving average with the average itself declining at -7.8% over 30 days — a confirmed downtrend — while the options market shows a put/call ratio of 2.30, reflecting an unusually high level of defensive positioning.
Trip ifPrice closes above the 200-day moving average for 20 or more consecutive trading days.
- P4Despite a forward P/E of 13.2x and PEG of 0.11 that appear inexpensive, the overall business quality score has breached the minimum acceptable threshold at 3.8 (below the 4.0 floor), meaning the apparent value discount is accompanied by below-par fundamental quality that limits investability.
Trip ifOverall quality score rises above 4.0 (the current minimum floor) for 2 consecutive evaluations.