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Bear of the Day: Floor & Decor (FND)

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Floor & Decor Holdings (FND - Free Report) is a multi-channel specialty retailer of hard surface flooring and related accessories. The stock is currently a Zacks Rank #5 (Strong Sell), with analysts taking their earnings expectations lower across the board.

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Image Source: Zacks Investment Research

In addition, the company resides in the Zacks Building Products – Wood industry, which is currently ranked in the bottom 27% of all Zacks industries. Let’s take a closer look at its current standing.

Floor & Decor

Floor & Decor has faced a challenging environment amid broader economic challenges (housing affordability, slower sales of large-ticket discretionary purchases), with earnings forecasted to pull back roughly 20% in its current year on 2.5% higher revenues.

Earnings growth resumes modestly in FY24, with consensus expectations alluding to 0.6% growth paired with an 8% sales bump.

Shares are a bit expensive given the forecasted growth, with the current 44.5X forward earnings multiple (F1) undoubtedly on the higher end of the spectrum and above the 38.9X five-year median.

The current value is also well above the respective Zacks industry average of 28.2X. The stock carries a Style Score of “D” for Value.

Zacks Investment Research
Image Source: Zacks Investment Research

Shares saw bullish activity post-earnings following its latest earnings release, helping spark a rally. Concerning headline figures, FND posted an 11% beat relative to the Zacks Consensus EPS Estimate and reported revenue modestly below expectations.

As shown below, the recent rally post-earnings has pushed shares above the 200-day daily moving average, a level that’s consistently seen action in previous instances. It looks worthwhile for investors to see if shares can hold and continue trading above this level, helping to further establish a meaningful positive trend.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Negative earnings estimate revisions from analysts paint a challenging picture for the company’s shares in the near term.

Floor & Decor Holdings (FND - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.

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