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On Tuesday, Piper Sandler adjusted its price target for Floor & Decor Holdings, Inc. (NYSE:FND) to $103.00, down from the previous target of $118.00, while maintaining a Neutral rating on the stock. The revision reflects the firm’s analysis of past flooring industry cycles, which suggests a more subdued recovery for the company’s earnings per share (EPS) growth.
The research firm’s commentary indicated that although there are positive aspects to Floor & Decor’s long-term growth prospects, such as its dominant position in the category, unit growth, strong management, and trends favoring hard surface flooring, the current stock valuation at 57 times next twelve months (NTM) EPS may overestimate the pace of recovery. Piper Sandler’s examination of the last four flooring industry downturns and recoveries over the past 45 years, considering the influence of interest rates and existing home sales, led to the conclusion that the current recovery cycle might not be as vigorous as previous ones.
Piper Sandler’s analysts have therefore adjusted their expectations for the stock’s performance to align with the market, anticipating it will perform in line with other shares. With Floor & Decor’s fourth-quarter earnings report due on Thursday, the firm has opted to maintain its Neutral stance on the stock but has reduced its price target to $103. This new target is based on a lower multiple assumption, decreasing from 46 times to 40 times the company’s estimated 2026 earnings per share.
The revised price target implies a more conservative outlook on the company’s earnings recovery, taking into account a potentially less robust upturn in EPS. Piper Sandler’s analysis indicates a cautious approach to Floor & Decor’s stock valuation in the near term, as investors look ahead to the upcoming earnings announcement.
In other recent news, Floor & Decor Holdings, Inc. has seen some significant developments. The company is set to reveal its fourth-quarter earnings report soon, with Citi analyst Steven Zaccone maintaining a Neutral rating on the company’s stock with a price target of $111. Zaccone cites stronger-than-expected fourth-quarter sales and earnings per share, among other factors, contributing to a positive outlook. However, he also expresses caution due to valuation concerns.
In addition to financial updates, Floor & Decor has announced the appointment of Bradley Paulsen as its new President, effective April 28, 2025. Paulsen brings extensive experience from his roles at Rentokil Initial (LON:RTO) plc, Rexel (EPA:RXL) USA, HD Supply, and The Home Depot (NYSE:HD).
Another recent development includes the rescheduling of the settlement hearing for the pending derivative litigation, Lincolnshire Police Pension Fund v. Taylor, et al., which will now take place on December 23, 2024. These recent developments continue to shape the trajectory of Floor & Decor Holdings, Inc.
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