BLDR - Embedded Expectations Analysis - 2018 05 29
Builders FirstSource, Inc. (BLDR:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings with a 14.8x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concern¬s about technology, commodity inflation, and revenueSpecifically, management may lack confidence in their ability to more efficiently manage their fleet through their delivery and dispatch management project system, and may have concerns about their ability to turn commodity inflation into a tailwind through pricing increases. Furthermore, they may have concerns about the seasonal nature of their working capital needs, and may also be concerned about the single-family shift to lower-price-point homes impacting their revenue and revenue per start
Builders FirstSource, through its subsidiaries is a supplier and manufacturer of building materials, manufactured components and construction services to homebuilders, sub-contractors, remodelers and consumers. The company provides a solution to its customers providing manufacturing, supply and installation of structural and related building products. The company's manufactured products include factory-built roof and floor trusses, and wall panels and stairs. The company also assembles interior and exterior doors into pre-hung units. Additionally, the company supplies its customers with building products not manufactured by the company, such as dimensional lumber and lumber sheet goods and various window, door and millwork lines.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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