Quanex Building Products Corporation (NYSE: NX) and Builders FirstSource (NASDAQ:BLDR) are both construction companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Analyst Ratings

This is a breakdown of current recommendations for Quanex Building Products Corporation and Builders FirstSource, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quanex Building Products Corporation 0 1 2 0 2.67
Builders FirstSource 0 2 4 0 2.67

Quanex Building Products Corporation presently has a consensus target price of $24.00, indicating a potential upside of 11.11%. Builders FirstSource has a consensus target price of $17.33, indicating a potential downside of 2.57%. Given Quanex Building Products Corporation’s higher probable upside, analysts plainly believe Quanex Building Products Corporation is more favorable than Builders FirstSource.

Volatility and Risk

Quanex Building Products Corporation has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500. Comparatively, Builders FirstSource has a beta of 2.09, suggesting that its share price is 109% more volatile than the S&P 500.

Valuation & Earnings

This table compares Quanex Building Products Corporation and Builders FirstSource’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Quanex Building Products Corporation $883.58 million 0.84 $95.14 million $0.38 56.84
Builders FirstSource $6.67 billion 0.30 $367.24 million $1.52 11.70

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

Insider and Institutional Ownership

99.9% of Quanex Building Products Corporation shares are owned by institutional investors. Comparatively, 85.9% of Builders FirstSource shares are owned by institutional investors. 5.3% of Quanex Building Products Corporation shares are owned by company insiders. Comparatively, 14.6% of Builders FirstSource shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Quanex Building Products Corporation and Builders FirstSource’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quanex Building Products Corporation 1.52% 7.87% 3.81%
Builders FirstSource 2.60% 43.83% 4.71%

Dividends

Quanex Building Products Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.7%. Builders FirstSource does not pay a dividend. Quanex Building Products Corporation pays out 42.1% of its earnings in the form of a dividend.

Summary

Builders FirstSource beats Quanex Building Products Corporation on 10 of the 15 factors compared between the two stocks.

Quanex Building Products Corporation Company Profile

Quanex Building Products Corporation manufactures components for original equipment manufacturers (OEM) in the building products industry. The Company’s components can be categorized as window and door (fenestration) components, and kitchen and bath cabinet components. The Company operates through three segments: North American Engineered Components (NA Engineered Components), which consists of four operating segments primarily focused on the fenestration market in North America manufacturing vinyl profiles, insulating glass (IG) spacers, screens and other fenestration components; European Engineered Components (EU Engineered Components), which consists of the United Kingdom-based vinyl extrusion business, manufacturing vinyl profiles and conservatories, and the European insulating glass business manufacturing IG spacers, and North American Cabinet Components (NA Cabinet Components), which consists of the North American cabinet door and components business.

Builders FirstSource Company Profile

Builders FirstSource, Inc. is a supplier and manufacturer of building materials, manufactured components and construction services to professional contractors, sub-contractors, remodelers and consumers. The Company’s operating segments include Northeast, Southeast, South and West. As of December 31, 2016, it operated at 400 locations in 40 states across the United States. It offers an integrated solution to its customers providing manufacturing, supply and installation of a range of structural and related building products. Its manufactured products include factory-built roof and floor trusses, wall panels and stairs, vinyl windows, custom millwork and trim, as well as engineered wood that it designs, cuts and assembles for each home. It assembles interior and exterior doors into pre-hung units. Additionally, it supplies customers with offering of professional grade building products, such as dimensional lumber and lumber sheet goods, and various window, door and millwork lines.

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