Floor & Decor (NYSE:FND) has been a clear winner coming out of the gate, that is, since the company went public in spring of 2017 when shares traded in their thirties and even the low forties in the days following the public offering. My last take on the name was in August 2018 when shares came a bit under pressure more than a year after the public offering as slower growth caused some doubts among investors amidst a premium valuation.
Past Take
When reviewing the prospects for Floor & Decor I stressed that I liked the business model and its great operating performance. The company sells floors: hard floor, wooden floors, laminate and associated accessories.
The company focuses on low pricing, breadth of its offerings and in-stock availability, providing essentially the best of all worlds to its customers. The company operated 83 stores in 2017, yet the stores are big as they generated an average of $16 million in sales each, or $1.38 billion in total. Nine years of double-digit comparable sales growth reveals that strength did not just come from a recovery in housing markets, yet is the result of very strong own performance as well.
The company held a 7% market share of the $20 billion hard surface market at the time. Based on this it anticipated potential for 400 stores across the country in the long run, it created a leaving a real road map for decades to come.
Trading at $37 per share, valuations were elevated even as they had come down a bit already. After all, the company reported adjusted earnings of $0.69 per share in 2017, and while this was better than I believed was possible at the time of the offering, valuations were lofty at 50 times earnings.
Furthermore, the company guided for further
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