Investment Case Updated: June 24, 2026
Price: $85.41 (6/24/26)
Market Capitalization: $9.2B
Enterprise Value: $14.4B
What the Company Does
BLDR is a leading supplier of building products and services to professional homebuilders in the United States. Management has been focused on growing “value-added” products and services to builders, which means that BLDR provides labor or services that could have otherwise been done by the contractor. These bundled solutions, which now comprise roughly half of all revenues, often help customers shorten build times while improving efficiency and profitability for BLDR while potentially increasing the stickiness of BLDR’s offerings.
Why We Own It
BLDR is a dominant player in a fragmented industry at a compelling valuation with ample room for growth. Management estimates a total market size of $110B for new single-family materials alone, implying that BLDR’s market share of ~10% has plenty of room to take share from or acquire smaller players, potentially providing more pricing power in the future. New single-family construction represented ~69% of BLDR’s 1Q26 revenues, while multi-family and remodel market segments were 11% and 20% of revenues, respectively, in even larger addressable markets. Between 2019-2025, BLDR averaged a return on equity of ~35%, implying a high-quality business. However, BLDR appears to be materially under-earning in the current environment, as management’s “normalized” framework contemplates $18.0B of revenue with $2.3B of Adjusted EBITDA (12.5% margin), well above FY26 guidance for revenue of $15.1B and Adjusted EBITDA of $1.3B (8.6% margin), reflecting meaningful temporary volume deleveraging with single-family starts in 2026 expected to fall back to pre-COVID levels. Despite the weaker demand environment, management continues to execute its downturn playbook through cost reductions ($100MM in FY26), facility consolidations, and ongoing technology investments that improve per-unit productivity while preserving strong service levels, positioning BLDR to continue gaining market share and emerge stronger as residential demand recovers.
Even with the high business quality, strong industry position and substantial earnings normalization potential, BLDR trades at a forward (FY27) EV/EBITDA multiple of 10.0x, while other leading distribution companies (FAST, FERG, GWW, WSO, POOL) trade between 12x and 23x next year’s EBITDA estimates.
How Management Allocates Capital
Management has four priorities – 1) Maintain a strong balance sheet with a leverage ratio between 1.0x and 2.0x EBITDA, 2) Grow organically, 3) Buy others, 4) Repurchase shares. Although leverage is currently above (3.2x) the upper end of management’s leverage target range, management remains committed to returning capital to shareholders and investing in growth. After buying back $303MM worth of stock in 1Q26 (3.3% of market cap), management has now bought back ~50% of its total shares outstanding since August 2021 and has $500MM of remaining buyback authorization (5.4% of market cap) as of quarter-end. Management has historically utilized M&A as an accelerator of the company’s growth strategy, completing 41 acquisitions since its merger with BMC in January 2021, accumulating >$2.3B in annual revenue for the company, and they are optimistic about future consolidation opportunities.
We originally posted our investment case for BLDR on February 6, 2024.