A Head to Head Comparison of Analog Devices, Inc. (ADI) and At Builders FirstSource, Inc. (BLDR)

The shares of Analog Devices, Inc. have increased by more than 31.68% this year alone. The shares recently went up by 3.73% or $4.06 and now trades at $113.02. The shares of Builders FirstSource, Inc. (NASDAQ:BLDR), has jumped by 76.08% year to date as of 08/13/2019. The shares currently trade at $19.21 and have been able to report a change of 1.21% over the past one week.

The stock of Analog Devices, Inc. and Builders FirstSource, Inc. were two of the most active stocks on Tuesday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: 9.34% versus 5.00%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that ADI will grow it’s earning at a 9.34% annual rate in the next 5 years. This is in contrast to BLDR which will have a positive growth at a 5.00% annual rate. This means that the higher growth rate of ADI implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. ADI has an EBITDA margin of 44.07%, this implies that the underlying business of ADI is more profitable. The ROI of ADI is 10.20% while that of BLDR is 14.50%. These figures suggest that BLDR ventures generate a higher ROI than that of ADI.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, ADI’s free cash flow per share is a positive 6.32, while that of BLDR is positive 1.9.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for ADI is 1.50 and that of BLDR is 1.70. This implies that it is easier for ADI to cover its immediate obligations over the next 12 months than BLDR. The debt ratio of ADI is 0.51 compared to 2.04 for BLDR. BLDR can be able to settle its long-term debts and thus is a lower financial risk than ADI.


ADI currently trades at a forward P/E of 20.46, a P/B of 3.55, and a P/S of 6.77 while BLDR trades at a forward P/E of 10.04, a P/B of 3.16, and a P/S of 0.30. This means that looking at the earnings, book values and sales basis, BLDR is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of ADI is currently at a -2.39% to its one-year price target of 115.79. Looking at its rival pricing, BLDR is at a -7.73% relative to its price target of 20.82.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), ADI is given a 2.20 while 2.50 placed for BLDR. This means that analysts are more bullish on the outlook for BLDR stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for ADI is 1.91 while that of BLDR is just 2.32. This means that analysts are more bullish on the forecast for ADI stock.


The stock of Analog Devices, Inc. defeats that of Builders FirstSource, Inc. when the two are compared, with ADI taking 7 out of the total factors that were been considered. ADI happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, ADI is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for ADI is better on when it is viewed on short interest.