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Floor & Decor Holdings, Inc.’s (NYSE:FND) announced its latest earnings update in December 2018, which suggested that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 13%. Below is a brief commentary on my key takeaways on how market analysts predict Floor & Decor Holdings’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for this coming year seems pessimistic, with earnings reducing by -4.5%. But in the following year, there is a complete contrast in performance, with arriving at double digit 25% compared to today’s level and continues to increase to US$174m in 2022.
Although it’s useful to be aware of the rate of growth each year relative to today’s level, it may be more beneficial to determine the rate at which the business is moving every year, on average. The advantage of this approach is that we can get a bigger picture of the direction of Floor & Decor Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15%. This means, we can presume Floor & Decor Holdings will grow its earnings by 15% every year for the next few years.
For Floor & Decor Holdings, there are three relevant factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is FND worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FND is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FND? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.