Floor & Decor is Thursday's IBD Stock Of The Day, as the flooring retailer sets up near an official buy point even as recent data shows existing homes sales falling and mortgage applications falling to near 30-year lows. FND edged lower Thursday, but is still actionable from an early entry.
FND stock was added to SwingTrader on Wednesday.
The Georgia-based Floor & Decor is a specialty retailer of flooring materials and related accessories for home building and remodeling. The company was founded in 2000. At the end of the first quarter, Floor & Decor was operating 194 warehouse stores in 36 states. The company plans to open 32-35 locations by the end of 2023.
On May 4, Floor & Decor narrowly missed Q1 analyst estimates for earnings and topped revenue views. Floor & Decor profits dropped 1% to 66 cents per share while sales increased around 9% to $1.12 billion. The company reported same-store sales falling 3.3%.
CEO Tom Taylor told investors at the time the company was working on "adapting to the significant year-over-year declines in existing home sales and broader macroeconomic challenges. "
"As consumers prioritize value and savings, we are capitalizing on our low prices and value options," Taylor said.
The company expects full-year sales around $4.61 billion-$4.75 billion. Floor & Decor also predicts comparable-store sales remaining flat vs. 2022 up to a 3% gain. Full-year profits are expected to be $2.55-$2.85 per share.
Analysts expect Floor & Decor earnings per share to fall 4% to $2.64 in 2023. Wall Street forecasts full-year revenue gaining 9% to $4.64 billion. A rebound is expected in 2024.
Existing-Homes Fall In April
Existing-home sales offer an important economic data point for Floor & Decor's business. Over the past couple of years, existing-home sales have slumped from above a 6-million-unit annual rate in 2021, fueled by a Covid-era housing boom, to a 4 million rate in January.
However, on May 18, the National Association of Realtors (NAR) released data showing existing-home sales retreated 3.4% in April, compared to a month earlier, and dropped more than 23% vs a year ago. NAR data showed the median existing-home sales price slipped around 2% from one year ago to $388,800. As prices fell, the inventory of unsold existing homes increased 7.2% from the previous month.
Experts report that homeowners are holding onto existing houses in order to stick with their low-interest rate mortgages.
New home sales improved for the fifth straight month in April, the Commerce Department reported on May 23, the most recent data available. The rise was modest, from a seasonally adjusted annual rate of 656,000 to 686,000.
Meanwhile, mortgage applications for home purchases dropped 1.4% in the week ended June 2, the second-lowest level since 1995, the Mortgage Bankers Association announced Wednesday.
Floor & Decor Stock
FND shares dropped 1.2% to 96.56 Thursday during market trade in volume that's well below normal. Floor & Decor stock leapt 5.1% Wednesday, running above its 50-day moving average in heavy volume. That move offered an early entry from the 50-day line. Floor & Decor stock is still actionable from that move.
FND has an official 101.39 buy point from a cup-with-handle base according to MarketSmith analysis.
Shares hit recent lows of 87.45 on May 19. However, since then the stock advanced around 11%.
IBD's Retail/Wholesale-Building Products has gained 6.6% in 2023. Floor & Decor stock leads that industry group, surging 34% this year.
FND has a 90 Composite Rating out of 99. Floor & Decor stock has a 90 Relative Strength Rating. The EPS Rating for FND is 94 out of 99.
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