Earnings Beat: Floor & Decor Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Simply Wall St
·4 min read

Floor & Decor Holdings, Inc. (NYSE:FND) shareholders are probably feeling a little disappointed, since its shares fell 7.2% to US$95.09 in the week after its latest full-year results. Floor & Decor Holdings reported US$2.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.84 beat expectations, being 5.2% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Floor & Decor Holdings

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Following the latest results, Floor & Decor Holdings' 18 analysts are now forecasting revenues of US$3.02b in 2021. This would be a major 25% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 9.5% to US$1.86. In the lead-up to this report, the analysts had been modelling revenues of US$2.94b and earnings per share (EPS) of US$1.88 in 2021. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a modest lift to to revenue forecasts.

The analysts increased their price target 7.0% to US$109, perhaps signalling that higher revenues are a strong leading indicator for Floor & Decor Holdings's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Floor & Decor Holdings, with the most bullish analyst valuing it at US$124 and the most bearish at US$90.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Floor & Decor Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 25% revenue growth noticeably faster than its historical growth of 20%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Floor & Decor Holdings is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Floor & Decor Holdings analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Floor & Decor Holdings that you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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