Value
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 10.0 |
| EV/EBITDA | 3.5 |
| Fwd P/E | 4.6 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 27.1x
- ▸PEG: 0.05
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. How we score · Editorial policy
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VerdictSELL
Overall score4.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Builders FirstSource shows excellent cash conversion and a sharp +44.8% earnings beat in its latest quarter, but weak quality, declining revenue, a 51% drawdown with a downtrending 200-day average, and a price 7.8% above the analyst target keep the setup unattractive.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is 345% of net income, yet quality scores only 3.4 with no competitive moat and thin margins (operating margin component 1.0, net margin 0.1). Quality breakdown | Net margin recovers so quality rises above 4.0 while cash conversion stays above 100% of net income. | ↓Deteriorating |
| CounterHigh cash conversion relative to depressed net income can reflect working-capital release in a downturn, which will not repeat once volume recovers. | ||
Revenue is declining 2% and growth scores only 2.0, ranking in the bottom of peers on growth. Growth breakdown | Revenue growth turns positive and exceeds 3% year over year within 12 months. | ↓Deteriorating |
| CounterThe growth reading has low confidence (0.33) with only one component available, and a housing-cycle recovery could swing revenue quickly. | ||
Three of the last four quarters were misses (including -27.6% on 2026-04-30), but the latest quarter beat by +44.8% at 1.51 versus 1.04 expected. Last 4 quarters | EPS meets or beats estimates in the 2027-02-18 report, extending the latest beat. | →Stable |
| CounterOne large beat after three misses does not establish a trend, and the average surprise across the four quarters is still negative at -0.6%. | ||
Price of $64.91 is 7.8% above the analyst target of $59.85, so the target is reached and reward-to-risk is negative at -0.52. Upside pct | Analysts raise targets above $65 after the earnings beat, or price retraces toward $60.37. | ↓Deteriorating |
| CounterA recent analyst cluster of three notes in the news suggests targets are being revised upward after the beat. | ||
Price is in an overbought bear rally with RSI 76, below a 200-day average sloping down 9.0% over 30 days, after a 51% drawdown from the 52-week high. Momentum breakdown | Price reclaims the 200-day average and the average stops declining over the next two quarters. | ↑Improving |
| CounterRising on-balance volume and a MACD score of 10 show strong buying, and a rally from deeply depressed levels can mark a durable bottom. | ||
Free cash flow is 345% of net income, yet quality scores only 3.4 with no competitive moat and thin margins (operating margin component 1.0, net margin 0.1).
↓DeterioratingQuality breakdown
- Expectation
- Net margin recovers so quality rises above 4.0 while cash conversion stays above 100% of net income.
CounterHigh cash conversion relative to depressed net income can reflect working-capital release in a downturn, which will not repeat once volume recovers.
Revenue is declining 2% and growth scores only 2.0, ranking in the bottom of peers on growth.
↓DeterioratingGrowth breakdown
- Expectation
- Revenue growth turns positive and exceeds 3% year over year within 12 months.
CounterThe growth reading has low confidence (0.33) with only one component available, and a housing-cycle recovery could swing revenue quickly.
Three of the last four quarters were misses (including -27.6% on 2026-04-30), but the latest quarter beat by +44.8% at 1.51 versus 1.04 expected.
→StableLast 4 quarters
- Expectation
- EPS meets or beats estimates in the 2027-02-18 report, extending the latest beat.
CounterOne large beat after three misses does not establish a trend, and the average surprise across the four quarters is still negative at -0.6%.
Price of $64.91 is 7.8% above the analyst target of $59.85, so the target is reached and reward-to-risk is negative at -0.52.
↓DeterioratingUpside pct
- Expectation
- Analysts raise targets above $65 after the earnings beat, or price retraces toward $60.37.
CounterA recent analyst cluster of three notes in the news suggests targets are being revised upward after the beat.
Price is in an overbought bear rally with RSI 76, below a 200-day average sloping down 9.0% over 30 days, after a 51% drawdown from the 52-week high.
↑ImprovingMomentum breakdown
- Expectation
- Price reclaims the 200-day average and the average stops declining over the next two quarters.
CounterRising on-balance volume and a MACD score of 10 show strong buying, and a rally from deeply depressed levels can mark a durable bottom.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.3 |
| ROA | 1.1 |
| Gross margin | 1.7 |
| Op margin | 1.0 |
| Net margin | 0.1 |
| Current ratio | 6.5 |
| FCF quality | 10.0 |
| Moat | 3.1 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 345% FCF/NI
- ▸No competitive moat
Growth
2.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.0 |
- ▸Declining revenue: -2%
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Overbought bear rally (RSI 71)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -9.1%/30d — confirmed downtrend
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 5.9 |
- ▸LLM news sentiment: +0.40 (n=5)
Insider
5.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.5 |
| notable moves | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.8 |
| quality rank | 1.0 |
| growth rank | 0.8 |
Technical
1.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.4 |
| support resistance | 2.9 |
| 52w position | 0.0 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.5 |
| days to cover | 8.1 |
| volatility | 0.5 |
| put call | 8.4 |
| implied vol | 2.4 |
| beta | 5.2 |
| debt equity | 4.4 |
| news risk | 5.0 |
- ▸High IV: 66%
Catalyst
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 2.2 |
| news activity | 8.0 |
- ▸Earnings concerns: 1B/3M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (7)
- MOMENTUM:5.8>=5.5
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.50
- NEWS_BOOST:ANALYST_CLUSTER(4)
- EARNINGS_PROXIMITY:106d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=5.8>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.29
Upside
-4.4%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 71
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -52% (>40% off 52w high)
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -0.3=NEGATIVE outcome against Sentiment at 5.9 and asymmetric R:R of -0.29.
The strongest dimensions are Sentiment at 5.9, Momentum at 5.8, and Value at 5.5; the weakest are Technical at 1.4, Growth at 2.0, and Peer rank at 2.1. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.29 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Excellent Cash Conversion Low Quality
Trip ifQuality score stays below 4.0 for 2 consecutive quarterly updates from current 3.4.
- P2Declining Revenue Weak Growth
Trip ifRevenue growth stays below 0% year over year for 2 more consecutive quarters.
- P3Earnings Volatility Latest Beat
Trip ifEPS surprise stays below 0% in the 2027-02-18 report and the one after.
- P4Price Above Analyst Target
Trip ifPrice drops to $60.37 or below, the stop level, before the analyst target is raised.
- P5Bear Rally In Downtrend
Trip ifMomentum score falls below 5.0 from current 7.3.