Bear of the Day: Floor & Decor (FND)
Floor & Decor Holdings (FND), a Zacks Rank #5 (Strong Sell), is a specialty retailer of hard surface flooring that just gave investors a reason to head for the exits.
A Q1 miss, a guide cut, and deteriorating same-store sales trends have the stock under pressure.
And the near-term picture isn't getting any clearer.
About the Company
Floor & Decor operates large-format warehouse stores selling tile, wood, laminate, vinyl, and natural stone flooring along with related installation materials and accessories.
The company targets both professional contractors and retail consumers, with a long-term ambition of operating 500 warehouse-format stores across the United States. At current levels, it is only about 55% built out toward that goal.
FND is valued at $5.5 billion with a forward PE of roughly 26. The stock has fallen sharply from its highs and is now trading around the $50 level.
The stock has Zacks Style Score of “D” in both Growth and Value, but also an “F” in Momentum.
Q1 Earnings Miss
Q1 EPS came in at $0.37 versus the $0.42 estimate, a 12% miss. Revenue was $1.15 billion, missing the $1.19 billion consensus. Comparable store sales fell 3.7% against an expectation of -2.9%, worse than feared and worse than the prior guide implied.
This was the company’s first EPS miss since 2024
Transactions fell 5.5% while average ticket rose just 1.9%, meaning fewer customers came through the door and the ones who did took on smaller projects with lower square footage. That's not a weather story; it’s a consumer pulling back on big-ticket discretionary spending.
Management was candid about what's driving the weakness: elevated 30-year mortgage rates keeping housing turnover depressed, declining consumer sentiment, and rising gas prices tied to Middle East geopolitical tensions.
The housing market remains the key overhang. Floor & Decor's core customer is someone remodeling after buying a home or taking on a large flooring project. This simply isn't showing up at the rate the business needs.
Earnings Estimates Fall After Earnings
Full-year EPS guidance was cut to $1.83-$2.08 from $1.98-$2.18. Revenue guidance moved to $4.77-$4.99 billion from $4.88-$5.03 billion. Same-store sales guidance was cut to -4.0% to flat from -2.0% to +1.0%. Every major metric moved in the wrong direction.
Estimates have followed. Current year EPS has dropped from $2.09 to $1.92 over the past seven days. Next year fell from $2.44 to $2.22. That's a meaningful reset, and with Q2-to-date comps already running at -4.5%, the new guidance may not be conservative enough.
The Technical Take
The stock is trading at lows not seen since 2020, right after COVID. This is not a good sign and while investors might want to buy the dip, the slide could continue if those fundamentals discussed above turn around.
The stock did bounce off recent lows but resistance will likely be found at the 200-day at $54. If the stock breaks below those recent lows, look for more pressure down to the $40 area.
In Summary
Floor & Decor has a legitimate long-term store expansion story, but the near-term setup is working against it on every front. Negative comps, falling estimates, a guide cut, and a housing market that shows no signs of thawing make FND a name to avoid until the macro picture changes.
For now, investors looking at the Home Furnishing space, should turn to FGI Industries (FGI). The stock is a Zacks Rank #1 (Strong) that is seeing analyst estimates improve.
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