Bear of the Day: Floor & Decor (FND)
Floor & Decor Holdings, Inc. FND is facing challenges due to the slow housing market. This Zacks Rank #5 (Strong Sell) is expected to see a double digit decline in earnings this fiscal year.
Floor & Decor is a specialty retailer and commercial flooring distributor operating 207 warehouse-format stores and 5 design studios in 36 states.
It sells hard-surface flooring, including tile, wood, laminate, vinyl, and natural stone along with decorative accessories and wall tile.
Floor & Decor Beats Again
On Nov 2, 2023, Floor & Decor reported third quarter fiscal 2023 results and beat the Zacks Consensus by $0.06. It reported $0.61 versus the consensus of $0.55. It has beat 3 out of the last 4 quarters and has only missed twice in the last 5 years.
Net sales rose 0.9% to $1,107.8 million from $1,097.8 million a year ago. Comparable store sales fell 9.3%.
Operating margin also fell 160 basis points to 7.7% year-over-year.
The company cited continuing economic challenges posed by rising mortgage interest rates, near-record-low existing home sales, ongoing pressure on housing affordability, and slowing sales of large ticket discretionary products. However, it's positioning the company for the eventual turnaround that will come.
Analysts Cut Estimates for Fiscal 2023 and 2024
The estimates are bearish about the rest of this year. 10 estimates were cut in the last week. The Zacks Consensus fell to $2.22 from $2.38.
That's an earnings decline of 19.6% as Floor & Decor made $2.76 last year.
Analysts are bearish on fiscal 2024 too. 10 earnings estimates were cut in the last 7 days as well, pushing the 2024 Zacks Consensus estimate to $2.23 from $2.86. That's just 0.5% earnings growth.
Shares Sink in the Last 3 Months
Floor & Decor has struggled over the last 2 years. Shares are down 41.1% during that time. They had a strong rally to start the year, but over the last 3 months, they're down 26.3%.
Image Source: Zacks Investment Research
Are they cheap?
Floor & Decor trades with a forward P/E of 36.2, which isn't cheap.
Investors might want to wait on the sidelines. The housing market remains challenging. Keep an eye on an eventual turn higher in the earnings.
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Floor & Decor Holdings, Inc. (FND) : Free Stock Analysis Report