Builders FirstSource, Inc. (BLDR) vs Morgan Stanley (MS)
Rewards
- ★Share count has been reduced by 20% over the past 4 years through buybacks, increasing each share's claim on earnings.
- ★FCF yield of 9.1% is historically attractive — the business generates significant cash relative to its price.
- ★Market sentiment is in extreme fear territory (score: 23/100) — historically, periods of fear have often presented buying opportunities.
- ★Gross margin of 87.1% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Each dollar of retained earnings has created $6.65 of market value — management is an exceptional capital allocator.
- ★PEG ratio of 0.75 suggests the stock is undervalued relative to its growth rate — paying less than 1x for each unit of earnings growth.
Risks
- ⚠ROIC has declined by 28.7 percentage points over the observed period, which may signal competitive erosion.
- ⚠Buybacks have been poorly timed — 3 out of 4 years involved repurchases at relatively expensive valuations.
- ⚠Trailing P/E of 21.7x is 46% above the historical average of 14.9x — the stock trades at a premium to its own history.
- ⚠High leverage (4.56x debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠Altman Z-Score of 0.29 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
- ⚠7 insider sales totaling $25.2M with no purchases in the past 3 months — insiders are reducing their exposure.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $84?
The market implies +14.4% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +5.3%, reflecting heavy growth investment.
Requires positive FCF to compute implied growth rate.
Economic Moat Score
Learn more →Narrow moat with reinvestment efficiency as the key competitive advantage. Improving margin stability would strengthen the moat.
No durable moat detected, though revenue predictability shows some competitive positioning. The business lacks consistent evidence of sustainable advantages.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pessimistic — investigate whether fears are temporary or structural"
"Market is pricing this stock without strong emotion in either direction"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.