On Wednesday, Evercore ISI maintained its In Line rating and a $110.00 price target for Floor & Decor Holdings, Inc. (NYSE:FND). The firm expressed concerns about the company's stock performance ahead of its fourth-quarter earnings report scheduled for next week. According to Evercore ISI, the recent surge in the stock price to over $100 may be overly optimistic, as it appears the market is anticipating a quicker rebound in Floor & Decor's business than the firm forecasts for the year 2024.
Floor & Decor's offerings, which are largely discretionary and big-ticket items, could face a slower recovery compared to the need-based home improvement sector. This caution is reflected despite positive signals from Evercore ISI's Home Improvement Leading Indicator (HILI), which turned positive for the first time since August 2022, driven by factors such as mortgage rates, home prices, and existing home sales.
The firm suggests that Floor & Decor's earnings per share (EPS) guidance might be adjusted to flat or down to near $2 on February 22nd. This potential adjustment is seen as possibly insufficient for the stock, which currently seems to factor in a recovery to $3 in EPS by the year 2025. Evercore ISI's stance indicates a more tempered outlook for Floor & Decor's near-term financial performance.
The analyst's commentary highlights a disconnect between the market's expectations for a sharp recovery in Floor & Decor's business and the slower, steady recovery projected by Evercore ISI. The firm's addition of Floor & Decor to its negative tactical trading list suggests caution among investors as the earnings report date approaches.
Investors and market watchers are now looking towards February 22nd, when Floor & Decor is expected to provide more clarity on its financial outlook and performance, which could influence the stock's trajectory in the near term.
InvestingPro Insights
As Floor & Decor Holdings, Inc. (NYSE:FND) approaches its earnings report, the InvestingPro platform has highlighted several metrics and tips that may offer additional context to investors. With a market capitalization of $11.51 billion, the company is trading at a high earnings multiple, with a P/E ratio of 41.21 and an adjusted P/E ratio for the last twelve months as of Q3 2023 at 40.68. This could signal that investors have high expectations for future earnings growth, aligning with the market's anticipation of a recovery in Floor & Decor's business.
The stock's volatility is another point to consider, as reflected by the 23.76% return over the last three months, indicating significant price movements. This volatility could be a factor for investors to watch, especially as the earnings report nears. Additionally, the company's strong return over the last three months may have contributed to the recent surge in stock price mentioned by Evercore ISI.
InvestingPro Tips also reveal that Floor & Decor operates with a moderate level of debt and that its cash flows can sufficiently cover interest payments, which could be reassuring for investors concerned about the company's financial health. Furthermore, analysts predict the company will be profitable this year, which may provide some optimism despite Evercore ISI's more conservative outlook.
For investors seeking a deeper dive into Floor & Decor's financials and future prospects, the InvestingPro platform offers additional insights. There are currently 11 more InvestingPro Tips available for FND, which can be accessed to help investors make more informed decisions. To explore these tips, visit InvestingPro and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.