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 stock? We will contrast the two companies based on the strength of their profitability, dividends, valuation, institutional ownership, analyst recommendations, earnings and risk.

Analyst Ratings

This is a summary of recent ratings for Builders FirstSource and Home Depot, as provided by MarketBeat.

	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 11.04%. Given Home Depot’s higher possible upside, analysts clearly believe Home Depot is more favorable than Builders FirstSource.

Insider and Institutional Ownership

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

Risk & Volatility

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Builders FirstSource	$22.73 billion	0.64	$2.75 billion	$15.50	7.36
Home Depot	$157.40 billion	1.87	$17.11 billion	$16.41	17.74

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.

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%

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.