Financial Survey: Builders FirstSource (NYSE:BLDR) and Trane Technologies (NYSE:TT)

Trane Technologies (NYSE:TT) and Builders FirstSource (NYSE:BLDR) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.

Valuation and Earnings

This table compares Trane Technologies and Builders FirstSource”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trane Technologies	$21.32 billion	4.23	$2.92 billion	$13.20	31.06
Builders FirstSource	$15.19 billion	0.45	$435.20 million	$0.91	69.45

Trane Technologies has higher revenue and earnings than Builders FirstSource. Trane Technologies is trading at a lower price-to-earnings ratio than Builders FirstSource, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Trane Technologies and Builders FirstSource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trane Technologies	13.28%	35.72%	13.65%
Builders FirstSource	0.71%	11.73%	4.32%

Insider & Institutional Ownership

83.0% of Trane Technologies shares are owned by institutional investors. Comparatively, 95.5% of Builders FirstSource shares are owned by institutional investors. 0.4% of Trane Technologies shares are owned by insiders. Comparatively, 2.7% of Builders FirstSource shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Trane Technologies and Builders FirstSource, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trane Technologies	0	4	14	2	2.90
Builders FirstSource	2	16	7	0	2.20

Trane Technologies presently has a consensus target price of $534.89, suggesting a potential upside of 30.45%. Builders FirstSource has a consensus target price of $75.90, suggesting a potential upside of 20.09%. Given Trane Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe Trane Technologies is more favorable than Builders FirstSource.

Risk & Volatility

Trane Technologies has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500. Comparatively, Builders FirstSource has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.

Summary

Trane Technologies beats Builders FirstSource on 11 of the 15 factors compared between the two stocks.

About Trane Technologies

Trane Technologies plc, together with its subsidiaries, designs, manufactures, sells, and services of solutions for heating, ventilation, air conditioning, custom, and custom and transport refrigeration in Ireland and internationally. It offers air conditioners, exchangers, and handlers; airside and terminal devices; air sourced heat pumps, auxiliary power units; chillers; coils and condensers; gensets; dehumidifiers; ductless; furnaces; home automation products; humidifiers; indoor air quality assessments and related products; large and light commercial unitary products; refrigerant reclamation products; thermostats/controls; transport heater products; variable refrigerant flow products; and water source heat pumps. The company also provides building management, telematic, control, energy efficiency and infrastructure program, geothermal, thermal energy, thermostats, rate chambers, package heating and cooling, temporary heating and cooling, and unitary systems; bus, rail, and multi-pipe heating, ventilation, and air conditioning systems; and container, diesel-powered, truck, industrial, rail, self-powered truck, trailer, and vehicle-powered truck refrigeration and air filtration systems, as well as aftermarket and OEM parts and supplies. In addition, it offers energy and facility management, installation and performance contracting, repair and maintenance, and rental services. It markets and sells its products under the Trane and Thermo King brands through sales offices, distributors, and dealers; and through sales and service companies with a supporting chain of distributors. The company was formerly known as Ingersoll-Rand Plc and changed its name to Trane Technologies plc in March 2020. Trane Technologies plc was founded in 1885 and is headquartered in Swords, Ireland.

About Builders FirstSource

Builders FirstSource, Inc., together with its subsidiaries, manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. It offers lumber and lumber sheet goods comprising dimensional lumber, plywood, and oriented strand board products that are used in on-site house framing; manufactured products, such as wood floor and roof trusses, floor trusses, wall panels, stairs, and engineered wood products; and windows, and interior and exterior door units, as well as interior trims and custom products comprising intricate mouldings, stair parts, and columns under the Synboard brand name. The company also provides specialty building products and services, including vinyl, composite and wood siding, exterior trims, metal studs, cement, roofing, insulation, wallboards, ceilings, cabinets, and hardware products; turn-key framing, shell construction, design assistance, and professional installation services. In addition, it offers software products, such as drafting, estimating, quoting, and virtual home design services, which provide software solutions to retailers, distributors, manufacturers, and homebuilders. The company was formerly known as BSL Holdings, Inc. and changed its name to Builders FirstSource, Inc. in October 1999. Builders FirstSource, Inc. was incorporated in 1998 and is based in Irving, Texas.