Floor & Decor Q3 Earnings: Is NYSE:FND Expensive at 55.8x Price/EPS?

in EARNINGS/INVESTING IDEAS by

Floor & Decor Holdings, Inc. (NYSE:FND) is scheduled to report Q3 earnings results after markets close for trading on October 29, 2020.

The company is expected to report earnings of $0.40/share on revenue of $647.5 million. The consensus earnings per share (EPS) of $0.40/share is based on a poll of 22 analysts and represents a growth in eps of 48.5% over the same quarter last year, when the company reported earnings of $0.27/share.

The revenue forecast of $647.5 million based on a poll of 20 analysts implies a year-over-year (YoY) growth in revenue of 24.3%. Last year the company reported $521.1 million in revenue for the quarter.

Expected to report EPS growth of 48.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $647.46 $521.09 24.3%
EPS $0.40 $0.27 48.5%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Floor & Decor Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.07 $0.13 74.2% Beat
Q1, 2020 $0.25 $0.34 34.4% Beat
Q4, 2019 $0.21 $0.26 23.8% Beat
Q3, 2019 $0.26 $0.27 4.6% Beat
Q2, 2019 $0.30 $0.34 11.7% Beat
Q1, 2019 $0.28 $0.29 3.9% Beat
Q4, 2018 $0.18 $0.20 9.9% Beat
Q3, 2018 $0.22 $0.24 7.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 25, 2020, the stock price reacted by falling −6.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $70.62 $65.90 −6.7% Decline
April 30, 2020 $42.77 $41.93 −2.0% Decline
February 20, 2020 $53.50 $57.67 7.8% Increase
November 1, 2019 $45.83 $46.13 0.7% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.22, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.22 implies a 1.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Floor & Decor Holdings, Inc. is currently trading at $78.16/share, down −3.6% for the day. The company is trading at approximately 90.5% of its 52-week high of $86.37/share. The company’s stock price is up 18.6% since the last earnings report and down −4.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 50.52 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:FND Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 55.77 and a forward P/E multiple of 67.84.

Floor & Decor Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of 9.53. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 25, 2020
Stock Price (Current) $78.16
P/E Ratio 55.8x
P/E Ratio (Fwd) 67.8x
PEG Ratio 2.7
Total Debt / Total Capital 12.5%
Levered Free Cash Flow -$4.624 million
EV / EBITDA 39.7x

Finbox

Floor & Decor Holdings, Inc. is a mid-cap stock with a market capitalization of $8.108 billion and a total enterprise value of $9.17 billion. The company operates in the Consumer Discretionary sector and the Specialty Retail industry.

Floor & Decor Holdings, Inc. operates as a multi-channel specialty retailer of hard surface flooring and related accessories. The company’s stores offer tile, wood, laminate, vinyl, and natural stone flooring products, as well as decorative and installation accessories. It serves professional installers, commercial businesses, and do it yourself customers. As of December 26, 2019, the company operated 120 warehouse-format stores in 30 states in the United States. Floor & Decor Holdings, Inc. also sells products through its Website, FloorandDecor.com. The company was formerly known as FDO Holdings, Inc. and changed its name to Floor & Decor Holdings, Inc. in April 2017. Floor & Decor Holdings, Inc. was founded in 2000 and is headquartered in Atlanta, Georgia.

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