Builders FirstSource, Inc.BLDRNYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $15,299.59 per share(market-calibrated)

+13332.5%

Upside to Fair Value

Current

$113.90

Pure Model

$15,732.06

Fair Value

$15,299.59

Bull Case

$19,014.91

Bear Case

$12,727.22

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

0.50%

Calibrated Growth

1.64%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $15,732.06.

What's Driving This Ratingfor BLDR

↓

CapEx normalizing toward maintenance

Historical CapEx is 479.28% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$96.5B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 11.24% — below the sector mature average of 13.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.5B (12.54% margin).

→

Moderate revenue growth

Analyst consensus projects -0.81% revenue growth, fading to 2.25% by Year 10. Revenue reaches $20.3B (vs $15.2B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 175bps below the model's 2.25%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 99.30% indicates efficient cash generation. FCF reaches $160.0B by Year 10 (788.49% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.55

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)11.47%

Cost of Debt

Pre-tax Cost of Debt3.45%

Tax Rate15.07%

After-tax Cost of Debt2.93%

Equity Weight (E/V)69.20%

Debt Weight (D/V)30.80%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (69.20% × 11.47%) + (30.80% × 2.93%)

= 8.84%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$15.1B	$17.2B	$18.2B	$19.0B	$20.3B
EBIT	$1.7B	$1.9B	$2.1B	$2.3B	$2.5B
Tax	$255M	$291M	$317M	$346M	$383M
NOPAT	$1.4B	$1.6B	$1.8B	$2.0B	$2.2B
+ Depreciation	$117.8B	$134.1B	$141.9B	$148.3B	$158.6B
- Capex	$72.2B	$64.1B	$48.6B	$30.8B	$710M
- Δ NWC	-$10M	$92M	$34M	$36M	$38M
Free Cash Flow	$47.0B	$71.6B	$95.0B	$119.5B	$160.0B
Discount Factor	0.919	0.776	0.655	0.553	0.429
Present Value	$43.2B	$55.5B	$62.2B	$66.0B	$68.6B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$160.0B

Terminal Growth Rate2.25%

WACC8.84%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$2.5T

PV of Terminal Value$1.1T

Exit Multiple Method

Year 10 EBITDA$161.1B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$2.9T

PV of Terminal Value$1.2T

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$604.2B

PV of Terminal Value$1.1T

Enterprise Value$1.7T

(-) Net Debt$5.5B

Equity Value$1.7T

Shares Outstanding111M

Price per Share$14,928.77

Exit Multiple Method

PV of Projected FCFs$604.2B

PV of Terminal Value$1.2T

Enterprise Value$1.8T

(-) Net Debt$5.5B

Equity Value$1.8T

Shares Outstanding111M

Price per Share$16,535.36

Pure Model Fair Value

$15,732.06

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
6.84%	$19,436.53	$20,132.49	$20,980.11	$22,035.01	$23,383.82
7.84%	$16,985.93	$17,439.64	$17,974.53	$18,614.51	$19,393.96
8.84%	$15,062.04	$15,373.42	$15,732.06	$16,149.61	$16,641.85
9.84%	$13,497.41	$13,719.48	$13,970.81	$14,257.59	$14,587.89
10.84%	$12,192.35	$12,355.51	$12,537.66	$12,742.33	$12,973.97

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$12,727.22

11074.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.94

Base Case

$15,732.06

13712.2% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.55

Bull Case

$19,014.91

16594.4% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 1.32

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.81%

Year 3 Revenue Growth6.72%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin11.24%

Terminal EBIT Margin13.00%

Tax Rate15.07%

Historical Capex / Rev479.28%

Terminal Capex / Rev3.50%

NWC / Revenue8.53%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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