Floor & Décor Holdings, Inc. FND recently cut full year guidance due to soft demand. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline by the double digits this year.
Floor & Décor is a specialty retailer and commercial flooring distributor with 230 stores and 5 design studios in 36 states. It offers an assortment of in-stock hard-surface flooring, including tile, wood, laminate, vinyl and natural store as well as decorative accessories and wall tile and installation materials.
Another Beat for Floor & Décor in Q2
On Aug 1, 2024, Floor & Décor reported second quarter results and beat the Zacks Consensus by $0.02. Earnings were $0.52 versus the consensus of $0.50.
It was the fifth beat in a row for Floor & Décor. It has an excellent earnings surprise track record, even within the pandemic years. It has only missed twice in the last 5 years, once in 2022 and once in 2023. That’s impressive.
Sales fell 0.2% to $1,133 billion from $1.135 billion a year ago.
The all-important comparable store sales also fell 9%. It did manage to open five new warehouse stores, however.
The company said the Fed’s monetary policy is continuing to impact its business and that of the housing and home remodeling industries. Consumers are holding back on large ticket purchases.
Floor & Décor Slashed Full-Year 2024 Guidance
As a result of the slowing, Floor & Décor slashed its full year earnings and comparable sales guidance.
It now sees earnings in the range of $1.55 to $1.75, down from the range it gave in May when it reported its first quarter results of $1.75 to $2.05.
Comparable store sales have also sunk to a range of (8.5%) to (6.5%) from the May 2024 range of (5.5%) to (2.0%).
No surprise that analysts have cut their 2024 earnings estimates as well. 11 estimates were lowered for fiscal 2024 in the last week. The Zacks Consensus has sunk to $1.67 from $1.81 the week prior.
That’s an earnings decline of 27%.
Image Source: Zacks Investment Research
Is Floor & Décor a Cheap Stock?
Shares of Floor & Décor are down 6.3% over the last year while Home Depot shares are up 5.8% during that same time.
Image Source: Zacks Investment Research
But with the earnings cut, the stock isn’t exactly cheap. Floor & Décor trades with a forward price-to-earnings ratio (P/E) of 58.
A true value stock would have a forward P/E under 20.
Floor & Décor has a long-term plan to operate 500 warehouse-format stores in the United States. It is nearly half-way there.
But given the pullback by consumers, investors might want to wait for a turnaround in comparable sales and earnings before jumping in.
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Floor & Decor Holdings, Inc. (FND) : Free Stock Analysis Report
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