Financial Analysis: Building Materials (BMCH) vs. Floor & Decor (FND)

Building Materials (NASDAQ: BMCH) and Floor & Decor (NYSE:FND) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

94.3% of Floor & Decor shares are held by institutional investors. 1.2% of Building Materials shares are held by company insiders. Comparatively, 8.2% of Floor & Decor shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Building Materials and Floor & Decor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Building Materials 0 2 5 0 2.71
Floor & Decor 0 10 6 0 2.38

Building Materials currently has a consensus price target of $23.43, indicating a potential upside of 33.34%. Floor & Decor has a consensus price target of $48.19, indicating a potential downside of 10.73%. Given Building Materials’ stronger consensus rating and higher possible upside, research analysts plainly believe Building Materials is more favorable than Floor & Decor.

Valuation and Earnings

This table compares Building Materials and Floor & Decor’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Building Materials $3.37 billion 0.35 $57.42 million $1.02 17.23
Floor & Decor $1.38 billion 3.72 $102.78 million $0.69 78.23

Floor & Decor has lower revenue, but higher earnings than Building Materials. Building Materials is trading at a lower price-to-earnings ratio than Floor & Decor, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Building Materials and Floor & Decor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Building Materials 1.71% 9.50% 4.57%
Floor & Decor 7.42% 21.26% 7.33%

Summary

Floor & Decor beats Building Materials on 9 of the 13 factors compared between the two stocks.

Building Materials Company Profile

BMC Stock Holdings, Inc. operates as lumber and building materials distributor and solutions provider in the United States. Its primary products include structural components, such as floor trusses, roof trusses, wall panels, and engineered wood products; lumber and lumber sheet goods, including dimensional lumber, plywood, and oriented strand board products used in on-site house framing under the Ready-Frame brand; and millwork, doors, and windows comprising interior and exterior doors, windows, interior trim, custom millwork, moldings, stairs and stair parts, and cabinetry and other products. The company also sells other building products and services that consist of hardware, wood boards, gypsum, insulation, roofing, siding, and flooring; and offers design, product specification, installation, and installation management services. It serves large-scale production homebuilders, custom homebuilders, multi-family builders, and repair and remodeling contractors. The company provides its products through a network of suppliers. BMC Stock Holdings, Inc. was founded in 1987 and is headquartered in Atlanta, Georgia.

Floor & Decor Company Profile

Floor & Decor Holdings, Inc., formerly FDO Holdings, Inc., is a retailer of hard surface flooring and related accessories. The Company retails its products such as tile, stone, wood, marble, glass and decoratives. The Company has 72 stores across 17 states in the United States. The Company provides its products to customers, including professional installers and commercial businesses (Pro), Do it Yourself customers (DIY) and customers who buy the products for professional installation (Buy it Yourself or BIY). The Company engages their customers both through trained store associates and designers who can assist in narrowing choices and making the process of home renovation easier. The Company also sells the products through its Website www.flooranddecor.com.

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