Spruce Point issues ‘strong sell’ research opinion on Floor & Decor

Spruce Point, in a new research note, issued a “strong sell” research opinion on Floor & Decor Holdings, saying Floor & Decor’s ballooning capital expenditures and new store operating costs in lower income and new geographic markets will severely impair its earnings potential. The firm believes Floor & Decor’s growth strategy is experiencing structural, not cyclical, challenges as competition increases, product, technology, marketing and labor advantages disappear, and customer demographics worsen as stores are opened in lower income and geographically challenged markets. The firm estimates a 40% to 60% downside risk, or approximately $39.75 – $59.65 per share.