Comparing Home Depot (NYSE:HD) and Builders FirstSource (NASDAQ:BLDR)

Builders FirstSource (NASDAQ:BLDR – Get Rating) and Home Depot (NYSE:HD – Get Rating) are both large-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, dividends and risk.

Profitability

This table compares Builders FirstSource and Home Depot’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Builders FirstSource	11.68%	55.42%	24.77%
Home Depot	10.75%	1,936.63%	21.93%

Insider and Institutional Ownership

94.7% of Builders FirstSource shares are owned by institutional investors. Comparatively, 68.3% of Home Depot shares are owned by institutional investors. 1.4% of Builders FirstSource shares are owned by company insiders. Comparatively, 0.2% of Home Depot shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Builders FirstSource has a beta of 1.98, indicating that its stock price is 98% more volatile than the S&P 500. Comparatively, Home Depot has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Earnings & Valuation

This table compares Builders FirstSource and Home Depot’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Builders FirstSource	$20.93 billion	0.74	$2.75 billion	$15.50	7.75
Home Depot	$157.40 billion	1.87	$17.11 billion	$16.41	17.71

Home Depot has higher revenue and earnings than Builders FirstSource. Builders FirstSource is trading at a lower price-to-earnings ratio than Home Depot, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and target prices for Builders FirstSource and Home Depot, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Builders FirstSource	0	0	0	0	N/A
Home Depot	0	12	14	0	2.54

Home Depot has a consensus price target of $323.25, indicating a potential upside of 11.21%. Given Home Depot’s higher possible upside, analysts plainly believe Home Depot is more favorable than Builders FirstSource.

Summary

Home Depot beats Builders FirstSource on 8 of the 13 factors compared between the two stocks.

About Builders FirstSource

(Get Rating)

Builders FirstSource, Inc. engages in the supply and manufacture of building materials, manufactured components and construction services to professional homebuilders, subcontractors, remodelers and consumers. Its products include factory-built roof and floor trusses, wall panels and stairs, vinyl windows, custom millwork and trim, and engineered wood. The company was founded by Kevin P. O’Meara, Donald F. McAleenan and John D. Roach in March 1998 and is headquartered in Dallas, TX.

About Home Depot

(Get Rating)

The Home Depot, Inc. engages in the sale of building materials and home improvement products. Its products include building materials, home improvement products, lawn and garden products and decor products. The firm operates through the following geographical segments: U.S., Canada and Mexico. It offers home improvement installation services, and tool and equipment rental. The company was founded by Bernard Marcus, Arthur M. Blank, Kenneth Gerald Langone and Pat Farrah on June 29, 1978, and is headquartered at Atlanta, GA.