Stifel Starts Floor & Decor Holdings, Inc. (FND) at Buy, '2Q23 results suggested continued market share gains'

Stifel analyst W. Andrew Carter initiates coverage on Floor & Decor Holdings, Inc. (NYSE: FND) with a Buy rating and a price target of $120.00.

The analyst comments "We are initiating coverage of Floor & Decor with a Buy rating and $120 target price. We derive our target price by assigning a 15x EV/FY25E EBITDA multiple, a significant premium multiple to specialty retail and premium to top-tier distributors. Floor & Decor’s leading position is compelling, in our view, with the scale and supply chain to fully capitalize on the advantaged hard surface flooring category. While boasting what we regard as unmatched position of strength, the platform is nascent with $4.4 billion in revenue versus the $52 billion addressable market. Against a retreat in enthusiasm around current environment’s challenges, we believe the shares undervalue the transformative growth potential. We believe our outlook appropriately captures weaker category conditions with comparable sales declines and new stores underperforming year-one expectations through 1H24. While below expectations, 2Q23 results suggested continued market share gains providing the ability to look through a weaker operating environment with the resources to sustain investment enhancing its leading position: $700 million liquidity, $1.3 billion OCF (3Q23E-4Q25E). We estimate 12% CAGR store growth through 2030 achieving the 500 U.S. store target (223 FY23E year-end) equally weighed between fill-ins and new markets from 223 year-end FY23E. We believe there is upside to the 500 store target given the whitespace markets with Floor& Decor yet to penetrate 80 300,000+ MSAs. We estimate $121 per share from our discountto-buildout analysis from the 500 store target which does not value the commercial opportunity, international expansion, or leveraging wholesale brands to efficiently capture category growth."

For an analyst ratings summary and ratings history on Floor & Decor Holdings, Inc. click here. For more ratings news on Floor & Decor Holdings, Inc. click here.

Shares of Floor & Decor Holdings, Inc. closed at $97.26 yesterday.

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