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

Institutional & Insider Ownership

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

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
GMS $2.41 billion 0.58 $182.43 million $1.32 25.80
BlueLinx Holdings $1.80 billion 0.04 $36.02 million $3.23 2.54

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.

Profitability

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

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for GMS and BlueLinx Holdings, as provided by MarketBeat.

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

GMS presently has a consensus price target of $36.83, suggesting a potential upside of 8.17%. Given GMS’s higher probable upside, analysts plainly believe GMS is more favorable than BlueLinx Holdings.

Risk and Volatility

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

Summary

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

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.

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.

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