Investors Heavily Search Builders FirstSource, Inc. (BLDR): Here is What You Need to Know

Builders FirstSource (BLDR) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.Over the past month, shares of this construction supply company have returned -19.8%, compared to the Zacks S&P 500 composite's +0.4% change. During this period, the Zacks Building Products - Retail industry, which Builders FirstSource falls in, has lost 13%. The key question now is: What could be the stock's future direction?While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.For the current quarter, Builders FirstSource is expected to post earnings of $2.30 per share, indicating a change of -35.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.For the current fiscal year, the consensus earnings estimate of $11.55 points to a change of -20.8% from the prior year. Over the last 30 days, this estimate has changed -0.1%.For the next fiscal year, the consensus earnings estimate of $12.27 indicates a change of +6.2% from what Builders FirstSource is expected to report a year ago. Over the past month, the estimate has changed -2%.With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Builders FirstSource.The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSProjected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.In the case of Builders FirstSource, the consensus sales estimate of $3.85 billion for the current quarter points to a year-over-year change of -7.1%. The $16.44 billion and $17.22 billion estimates for the current and next fiscal years indicate changes of -3.9% and +4.8%, respectively.Last Reported Results and Surprise HistoryBuilders FirstSource reported revenues of $4.23 billion in the last reported quarter, representing a year-over-year change of -6.7%. EPS of $3.07 for the same period compares with $4.24 a year ago.Compared to the Zacks Consensus Estimate of $4.47 billion, the reported revenues represent a surprise of -5.22%. The EPS surprise was -0.65%.Over the last four quarters, Builders FirstSource surpassed consensus EPS estimates three times. The company topped consensus revenue estimates two times over this period.ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Builders FirstSource is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Builders FirstSource. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. 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