Fortune Brands Home & Security (NYSE:FBHS) and Builders FirstSource (NASDAQ:BLDR) are both industrial products companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.
Valuation and Earnings
This table compares Fortune Brands Home & Security and Builders FirstSource's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Fortune Brands Home & Security | $5.76 billion | 2.23 | $431.90 million | $3.60 | 25.71 |
Builders FirstSource | $7.28 billion | 0.69 | $221.81 million | $2.09 | 20.52 |
Fortune Brands Home & Security has higher earnings, but lower revenue than Builders FirstSource. Builders FirstSource is trading at a lower price-to-earnings ratio than Fortune Brands Home & Security, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
86.6% of Fortune Brands Home & Security shares are owned by institutional investors. Comparatively, 95.3% of Builders FirstSource shares are owned by institutional investors. 1.5% of Fortune Brands Home & Security shares are owned by insiders. Comparatively, 1.8% of Builders FirstSource shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Volatility and Risk
Fortune Brands Home & Security has a beta of 1.66, indicating that its share price is 66% more volatile than the S&P 500. Comparatively, Builders FirstSource has a beta of 2.65, indicating that its share price is 165% more volatile than the S&P 500.
Analyst Ratings
This is a summary of current recommendations for Fortune Brands Home & Security and Builders FirstSource, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Fortune Brands Home & Security | 1 | 6 | 10 | 0 | 2.53 |
Builders FirstSource | 0 | 0 | 16 | 0 | 3.00 |
Fortune Brands Home & Security presently has a consensus target price of $83.2222, suggesting a potential downside of 10.10%. Builders FirstSource has a consensus target price of $38.9375, suggesting a potential downside of 9.19%. Given Builders FirstSource's stronger consensus rating and higher possible upside, analysts clearly believe Builders FirstSource is more favorable than Fortune Brands Home & Security.
Profitability
This table compares Fortune Brands Home & Security and Builders FirstSource's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Fortune Brands Home & Security | 8.36% | 22.37% | 8.68% |
Builders FirstSource | 2.76% | 29.40% | 7.22% |
Summary
Builders FirstSource beats Fortune Brands Home & Security on 8 of the 14 factors compared between the two stocks.