Building materials company Builders FirstSource (NYSE: BLDR) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 5% year on year to $4.23 billion. The company’s full-year revenue guidance of $15.2 billion at the midpoint came in 6.6% below analysts’ estimates. Its non-GAAP profit of $2.38 per share was 1.6% above analysts’ consensus estimates.

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Peter Jackson, CEO of Builders FirstSource, commented: “Our durable results in the second quarter reinforce the advantage of our differentiated product offerings and commitment to execution. In this challenging market environment, we are prioritizing what’s within our control—serving customers with excellence, leveraging technology, and managing the business with discipline. We remain focused on building for the future through investments in value-added solutions, digital capabilities, and operational efficiency. These efforts are strengthening our position in the industry and laying the foundation to emerge stronger and accelerate delivery of long-term shareholder value as market conditions improve.”

Company Overview

Headquartered in Irving, TX, Builders FirstSource (NYSE: BLDR) is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Builders FirstSource’s 13.5% annualized revenue growth over the last five years was exceptional. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Builders FirstSource’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 7.2% over the last two years.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Manufactured products and Windows, doors & millwork , which are 22.5% and 24.3% of revenue. Over the last two years, Builders FirstSource’s Manufactured products revenue (floors, wall panels, and engineered wood) averaged 13.8% year-on-year declines while its Windows, doors & millwork revenue (self explanatory) averaged 5.8% declines.

This quarter, Builders FirstSource missed Wall Street’s estimates and reported a rather uninspiring 5% year-on-year revenue decline, generating $4.23 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 3.3% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

Builders FirstSource has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12.1%.

Analyzing the trend in its profitability, Builders FirstSource’s operating margin decreased by 1.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Builders FirstSource generated an operating margin profit margin of 7.4%, down 3.6 percentage points year on year. Since Builders FirstSource’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Builders FirstSource’s EPS grew at an astounding 34.4% compounded annual growth rate over the last five years, higher than its 13.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Builders FirstSource’s earnings quality to better understand the drivers of its performance. A five-year view shows that Builders FirstSource has repurchased its stock, shrinking its share count by 5.4%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Builders FirstSource, its two-year annual EPS declines of 22.1% mark a reversal from its (seemingly) healthy five-year trend. We hope Builders FirstSource can return to earnings growth in the future.

In Q2, Builders FirstSource reported adjusted EPS at $2.38, down from $3.50 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 1.6%. Over the next 12 months, Wall Street expects Builders FirstSource’s full-year EPS of $9.27 to shrink by 7.1%.

Key Takeaways from Builders FirstSource’s Q2 Results

Builders FirstSource's Windows, doors & millwork revenue missed and its full-year revenue guidance fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 7.8% to $116.14 immediately following the results.

The latest quarter from Builders FirstSource’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.