The relaxation in COVID-related restrictions and lower interest rates are fueling demand for Floor & Decor Holdings’ (FND) products and offerings. The specialty retailer of hard surface flooring has witnessed an acceleration in its top and bottom-line growth rate, which has pushed its stock price higher.
With a market capitalization of $12.59 billion, Floor & Decor stock has appreciated by over 75% in one year. Further, it has increased approximately 29% on a year-to-date basis. (See Floor & Decor Holdings stock chart on TipRanks)
The company recently delivered stellar Q2 performance. Its net sales jumped 86% year-on-year to $860 million and handily surpassed the Street’s estimates of $842 million. Notably, its Q2 revenue growth accelerated, compared to a 41% jump in its top-line in the previous quarter.
Higher transactions and ticket size continue to boost its comparable-store sales, and in turn, its overall revenues. Meanwhile, the strong performance of its new stores remains positive. Thanks to the higher revenues and operating leverage, Floor & Decor delivered adjusted EPS of $0.73, much higher than the prior-year quarter’s EPS of $0.13. Furthermore, its Q2 earnings exceeded analysts’ EPS estimate of $0.64.
In response to its Q2 performance, Jefferies analyst Randal Konik said Floor & Decor’s Q2 performance indicates that “hard surface flooring is a good place for investors to be in ’21.”
Konik highlighted multiple growth catalysts that could continue to drive Floor & Decor’s financial and operating performance in the future. The analyst stated, “We see FND benefiting from nesting, excess consumer walletshare from forgone vacations & travel, low rates driving housing demand, rising home values, and an accelerating shift away from soft surface.”
Konik noted that Floor & Decor’s valuation is “justified,” given its solid long-term growth potential. He maintained a buy rating on FND stock and increased the price target to $146 (22% upside potential) from $136.
Notably, Floor & Decor has delivered positive comparable store sales growth in the last 12 years, and management expects 2021 to be no different. Its CEO, Tom Taylor, said, “Strong execution coupled with the favorable economic environment is enabling us to achieve record sales and profitability in fiscal 2021.”
On TipRanks, FND has an analyst rating consensus of Strong Buy, based on 11 Buys and 1 Hold. The average Floor & Decor Holdings price target is $134.36, implying approximately 12.3% upside potential to current levels.
Disclosure: Amit Singh held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
