Simple Concepts Research Group

What You Need To Know Before Buying BlueLinx (NYSE: BXC)

by | Dec 12, 2022 | 52 Week Lows, Industrial, Stock Picks

bluelinx bxc stock valuation

BlueLinx Holdings (BXC) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for BlueLinx Holdings (BXC) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

BlueLinx Holdings Fundamentals

BXC Stock Rating

Stock Price Target: $82.37

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for BlueLinx in comparison to the Retail Distribution industry and the S&P 500.

BlueLinx is a Small Cap company with a Market Cap of $609M.

How are investors using BlueLinx earnings yield to assess the company?

BlueLinx Holdings (BXC)_ Earnings Yield in Comparison to the Retail Distribution Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for BlueLinx is 52.08%, in comparison to 4.89% for the S&P 500 and 3.57% for the 10-year treasury bond. The median earnings yield for the Retail Distribution industry is 6.81%.

What does BlueLinx Price-to-Earnings Ratio (P/E) tell investors about the company?

BlueLinx Holdings (BXC)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Retail Distribution Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

BlueLinx is currently trading at a P/E of 1.97. The P/E for the Retail Distribution industry is 9.90 and the P/E for the S&P 500 is 20.46.

What is the current Price-to-Sales Ratio (P/S) for BlueLinx?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

BlueLinx is currently trading at a P/S of 0.15. The P/S for the Retail Distribution industry is 1.43 and the P/S for the S&P 500 is 2.37.

How does BlueLinx Price-to-BookRatio (P/B) compare to the Retail Distribution industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

BlueLinx P/B ratio is 1.83. The P/B for the Retail Distribution industry is 4.23 and the P/B for the S&P 500 is 3.93.

How attractive is BlueLinx Return on Invested Capital (ROIC) to investors?

BlueLinx Holdings (BXC)_ Return on Invested Capital in Comparison to the Retail Distribution Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

BlueLinx ROIC is currently 34.18% in comparison to 15.14% for the Retail Distribution industry and 10.10% for the S&P 500.

BlueLinx Holdings (DXC)_ Price Target & 52-Week Price Range

How has BXC stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, BlueLinx has traded between the range of $57.49 and $100.01.

The current Analyst Price Target for BlueLinx is $82.37.

What is BlueLinx YOY Performance in comparison to its industry and the total market?

The YOY performance for BlueLinx is -19.59%. The Retail Distribution industry has a YOY performance of -4.74% in comparison to the YOY S&P 500 performance of -16.05%.

BlueLinx Holdings (BXC)_ YOY Performance in Comparison to the Retail Distribution Industry and the S&P 500

Recent Financial Results

  • Delivered net sales of $1.1B, an increase of 9%
  • Grew specialty product sales 13% to $724M, or 68% of total sales
  • Increased gross profit 24% to $189M and gross margin 210 basis points to 17.9%
  • Reported net income of $60M and increased diluted earnings per share 35% to $6.38
  • Grew adjusted EBITDA 27% to $100M
  • Generated $143M of operating cash and $130M of FCF
  • Reduced net leverage to 0.7x and increased available liquidity to an all-time high of $576M
  • Completed previously announced $60M accelerated share repurchase program on September 15, 2022
  • Acquired Vandermeer Forest Products on October 3, 2022

Stock Price Target: $82.37

Company Overview

BXC Stock Rating

BlueLinx Holdings Inc., together with its subsidiaries, distributes residential and commercial building products in the United States. The company distributes specialty products comprising engineered wood, industrial products, cedar, moulding, siding, metal, and insulation products; and structural products include lumber, plywood, oriented strand boards, rebars and remesh, spruce, and other wood products primarily that are used for structural support in construction projects. It also provides various value-added services and solutions to customers and suppliers. The company serves dealers, specialty distributors, national home centers, and manufactured housing customers through a network of distribution centers. BlueLinx Holdings Inc. was incorporated in 2004 and is headquartered in Marietta, Georgia.

Be sure to add BlueLinx (BXC) to your Watch List and if you haven’t done so already. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.