Stock (Symbol) |
Floor & Decor Holdings (FND) |
Stock Price |
$46 |
Sector |
| Retail & Travel |
Data is as of |
| January 4, 2018 |
Expected to Report |
| Feb 2 |
Company Description |
 Floor & Decor Holdings, Inc., formerly FDO Holdings, Inc., is a retailer of hard surface flooring and related accessories. The Company retails its products such as tile, stone, wood, marble, glass and decoratives. The Company has 72 stores across 17 states in the United States. The Company provides its products to customers, including professional installers and commercial businesses (Pro), Do it Yourself customers (DIY) and customers who buy the products for professional installation (Buy it Yourself or BIY). The Company engages their customers both through trained store associates and designers who can assist in narrowing choices and making the process of home renovation easier. The Company also sells the products through its Website www.flooranddecor.com. Source: Thomson Financial |
Sharek’s Take |
 Floor & Decor (FND) is the hottest bricks & mortar retailer right now. Founded in 2000, F&D offers the industry’s broadest assortment of tile, wood, laminate and stone flooring in huge 70,000 sq ft warehouse formats, compared to home improvement centers which dedicate just 3000 to 5000 ft to hard surface flooring. 40% of total sales are to do-it-yourselfers and 60% are to professional contractors, with the highest pro customer mix in the industry. Here’s the category breakdown as of 2016:
As of fiscal year end 2016 the company had just 69 stores in operation — just sixty nine! With a potential of 400 nationwide. Management plans on growing the store base 20% a year for the next several years. But more importantly each existing store keeps raking in the bucks. Same store sales have been in the double-digits for eight consecutive years. And to me double-digit SSS is the key statistic super retailers possess. Floor & Decor has two winds at its back. First, rising home prices and people’s inclination to stay at home (and improve it) are keeping demand strong. Second, the market continues to shift towards hard surfaces. In 2002 carpets were 61% of the market, and just 49% today. FND looks fantastic. Except for its valuation. The stock has a P/E of 54, double it’s Est. LTG of 27% a year. But, the company has beaten the street in two of the three qtrs since it went public in 2017. And 2017 estimates have increased from $0.53 to $0.66 during that span. So with 2018 estimates at $0.88, perhaps FND can earn $1 and if so the stock is selling for 46x profits. Yes, that’s not cheap. But if you let the stock take off without you, you could miss out totally. Thus I will add FND to the Growth Portfolio. The nice thing is Amazon isn’t could to kill the industry, as people have to go in and see the product before buying. |
One Year Chart |
 Last qtr FND delivered 27% sales growth with 14% SSS growth (which is very good). Profits jumped 42% and beat estimates of 17%. Since this company just had its IPO, EPS figures are difficult to find. NxtQtr FND is expected to make $0.16, but since I don’t have the year-ago figure I can’t calculate the profit growth rate. Thus it reads N/A on the chart even though I expect profits to grow next qtr. Overall, profit growth is Estimates are for N/A, 38%, 25% and 29% the next 4 qtrs. FND has beaten the street in two of the last three qtrs, so maybe it can do better than these estimates suggest. P/E of 54 is high but homebuilders are breaking out and with the sector hot this little stock could ride the wave and go a lot higher. Or maybe not, as the valuation is high. |
Fair Value |
 My Fair Value is 50x earnings, or $43 in 2018 and $53 in 2019. So I’m hoping the company can continue to up estimates — and keep its premium valuation. |
Bottom Line |
 FLoor & Decor is the hottest bricks & mortar retailer I’m aware of. I feel a lot of smart money is aware of the concept, and with the company being so small there could come a time when shareholders don’t want to sell, and that could push the stock higher. I will add FND to the Growth Portfolio, where it will start out ranking 25th of 37 stocks in the Power Rankings. |
Power Rankings |
Growth Stock Portfolio
25 of 37Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
