Analyzing Builders FirstSource (NYSE:BLDR) and CSW Industrials (NYSE:CSW)

Builders FirstSource (NYSE:BLDR) and CSW Industrials (NYSE:CSW) are both mid-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitability, valuation and institutional ownership.

Volatility and Risk

Builders FirstSource has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500. Comparatively, CSW Industrials has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Builders FirstSource and CSW Industrials, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Builders FirstSource	3	12	9	0	2.25
CSW Industrials	0	6	1	2	2.56

Builders FirstSource presently has a consensus target price of $87.52, suggesting a potential upside of 51.27%. CSW Industrials has a consensus target price of $347.57, suggesting a potential upside of 20.34%. Given Builders FirstSource’s higher probable upside, equities analysts plainly believe Builders FirstSource is more favorable than CSW Industrials.

Earnings and Valuation

This table compares Builders FirstSource and CSW Industrials”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Builders FirstSource	$15.19 billion	0.41	$435.20 million	$0.91	63.58
CSW Industrials	$1.08 billion	4.35	$112.04 million	$7.29	39.62

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

Insider & Institutional Ownership

95.5% of Builders FirstSource shares are owned by institutional investors. Comparatively, 82.8% of CSW Industrials shares are owned by institutional investors. 2.7% of Builders FirstSource shares are owned by company insiders. Comparatively, 1.2% of CSW Industrials shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Builders FirstSource and CSW Industrials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Builders FirstSource	0.71%	11.73%	4.32%
CSW Industrials	10.34%	17.41%	8.90%

Summary

Builders FirstSource beats CSW Industrials on 8 of the 15 factors compared between the two stocks.

About Builders FirstSource

Builders FirstSource, Inc., together with its subsidiaries, manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. It offers lumber and lumber sheet goods comprising dimensional lumber, plywood, and oriented strand board products that are used in on-site house framing; manufactured products, such as wood floor and roof trusses, floor trusses, wall panels, stairs, and engineered wood products; and windows, and interior and exterior door units, as well as interior trims and custom products comprising intricate mouldings, stair parts, and columns under the Synboard brand name. The company also provides specialty building products and services, including vinyl, composite and wood siding, exterior trims, metal studs, cement, roofing, insulation, wallboards, ceilings, cabinets, and hardware products; turn-key framing, shell construction, design assistance, and professional installation services. In addition, it offers software products, such as drafting, estimating, quoting, and virtual home design services, which provide software solutions to retailers, distributors, manufacturers, and homebuilders. The company was formerly known as BSL Holdings, Inc. and changed its name to Builders FirstSource, Inc. in October 1999. Builders FirstSource, Inc. was incorporated in 1998 and is based in Irving, Texas.

About CSW Industrials

CSW Industrials, Inc. operates as a diversified industrial company in the United States and internationally. It operates through three segments: Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions. The Contractor Solutions segment provides condensate pads, pans, pumps, switches, and traps; cements, diffusers, grilles, registers, solvents, thread sealants, and vents; line set covers; refrigerant caps; wire pulling head tools; electrical protection, chemical maintenance, and installation supplies for HVAC; ductless mini-split systems installation support tools and accessories; and drain waste and vent system products for use in HVAC/R, plumbing, general industrial, architecturally specified building products. The Engineered Building Solutions segment offers architectural railings and associated services; fire and smoke protection solutions; and pre-engineered and custom architectural building components for use in architecturally specified building products. The Specialized Reliability Solutions segment provides compounds, lubricants, lubricant management products, and sealants; desiccant breather filtration products; and contamination control, industrial maintenance and repair, rail friction modifiers, sealants, and operations solutions for use in energy, general industrial, mining, and rail transportation. The company was incorporated in 2014 and is headquartered in Dallas, Texas.