BlueLinx Holdings (NYSE: BXC) and GMS (NYSE:GMS) are both small-cap construction companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Insider and Institutional Ownership

74.5% of BlueLinx Holdings shares are owned by institutional investors. Comparatively, 55.5% of GMS shares are owned by institutional investors. 2.3% of BlueLinx Holdings shares are owned by insiders. Comparatively, 5.9% of GMS shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares BlueLinx Holdings and GMS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BlueLinx Holdings 1.62% -22.97% 1.57%
GMS 2.28% 14.13% 5.12%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for BlueLinx Holdings and GMS, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BlueLinx Holdings 0 0 0 0 N/A
GMS 0 2 5 0 2.71

GMS has a consensus price target of $36.83, indicating a potential upside of 5.51%. Given GMS’s higher probable upside, analysts clearly believe GMS is more favorable than BlueLinx Holdings.

Volatility and Risk

BlueLinx Holdings has a beta of 2.3, indicating that its stock price is 130% more volatile than the S&P 500. Comparatively, GMS has a beta of 3.4, indicating that its stock price is 240% more volatile than the S&P 500.

Earnings & Valuation

This table compares BlueLinx Holdings and GMS’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BlueLinx Holdings $1.80 billion 0.04 $36.02 million $3.23 2.47
GMS $2.41 billion 0.59 $182.43 million $1.32 26.45

GMS has higher revenue and earnings than BlueLinx Holdings. BlueLinx Holdings is trading at a lower price-to-earnings ratio than GMS, indicating that it is currently the more affordable of the two stocks.

Summary

GMS beats BlueLinx Holdings on 11 of the 13 factors compared between the two stocks.

About BlueLinx Holdings

BlueLinx Holdings, Inc. is a distributor of building products in North America. The Company operates its distribution business through a network of approximately 40 distribution centers. It serves metropolitan areas in the United States and delivers building products to a range of wholesale and retail customers. The Company distributes products in approximately two categories, such as structural products and specialty products. Structural products include plywood, oriented strand board (OSB), rebar and remesh, lumber and other wood products primarily used for structural support, walls and flooring in construction projects. Specialty products include roofing, insulation, specialty panels, molding, engineered wood products, vinyl products (used primarily in siding), outdoor living, particle board and metal products (excluding rebar and remesh). It also provides a range of services and solutions, such as intermodal distribution services; inventory stocking, and backhaul services.

About GMS

GMS Inc. is a distributor of wallboard and suspended ceilings systems, or ceilings. The Company provides a product offering of over 20,000 stock keeping units (SKUs) of wallboard, ceilings and complementary interior construction products for interior contractors. It offers steel framing and ancillary products for its customers. Its Wallboard is a building product for interior and exterior walls and ceilings in residential and commercial structures. Its ceilings product line consists of suspended mineral fiber, soft fiber and metal ceiling systems primarily used in offices, hotels, hospitals, retail facilities, schools and a range of other commercial and institutional buildings. Its steel framing product line consists of steel track, studs and various other steel products used to frame the interior walls of a commercial or institutional building. It supplies complementary products, including insulation, ready-mix-joint compound and various other interior construction products.

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