Head-To-Head Contrast: Builders FirstSource (NYSE:BLDR) & Fastenal (NASDAQ:FAST)

Fastenal (NASDAQ:FAST) and Builders FirstSource (NYSE:BLDR) are both large-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Profitability

This table compares Fastenal and Builders FirstSource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fastenal	15.13%	31.99%	24.36%
Builders FirstSource	5.66%	28.02%	11.18%

Risk and Volatility

Fastenal has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, Builders FirstSource has a beta of 1.7, meaning that its stock price is 70% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Fastenal and Builders FirstSource, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fastenal	1	8	2	0	2.09
Builders FirstSource	0	4	15	1	2.85

Fastenal presently has a consensus target price of $40.40, suggesting a potential downside of 0.90%. Builders FirstSource has a consensus target price of $163.11, suggesting a potential upside of 41.46%. Given Builders FirstSource’s stronger consensus rating and higher probable upside, analysts clearly believe Builders FirstSource is more favorable than Fastenal.

Earnings and Valuation

This table compares Fastenal and Builders FirstSource”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fastenal	$7.55 billion	6.20	$1.15 billion	$1.00	40.77
Builders FirstSource	$16.40 billion	0.78	$1.08 billion	$7.80	14.78

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

Insider & Institutional Ownership

81.4% of Fastenal shares are held by institutional investors. Comparatively, 95.5% of Builders FirstSource shares are held by institutional investors. 0.4% of Fastenal shares are held by company insiders. Comparatively, 1.8% of Builders FirstSource 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.

Summary

Builders FirstSource beats Fastenal on 9 of the 15 factors compared between the two stocks.

About Fastenal

Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally. It offers fasteners, and related industrial and construction supplies under the Fastenal name. The company’s fastener products include threaded fasteners, bolts, nuts, screws, studs, and related washers that are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. It also offers miscellaneous supplies and hardware, including pins, machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the manufacturing market comprising original equipment manufacturers; maintenance, repair, and operations customers; non-residential construction market; farmers, truckers, railroads, mining companies, schools, and retail trades; and oil exploration, production, and refinement companies, as well as federal, state, and local governmental entities. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.

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.