Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Floor & Decor Holdings Are Down 9% Despite a Solid First Quarter

By Daniel Miller - May 3, 2018 at 2:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It was a solid first quarter for Floor & Decor, but softer-than-anticipated guidance could be sending shares lower Thursday.

What happened

Shares of Floor & Decor Holdings, Inc. (FND 3.19%), a multi-channel specialty retailer of hard surface flooring and accessories, are down 9.3% as of 11:40 a.m. EDT Thursday, after the company announced fiscal 2018 first-quarter results.

So what

Starting from the top, net sales jumped 31.1%, compared to the prior year, to $402.9 million, which was slightly ahead of analysts' estimates calling for $401 million. Comparable store sales increased 15.6% driven in part by a 400 basis point post-hurricane demand in Houston. On the bottom line, adjusted earnings per share jumped 100% to $0.26, compared to the prior year, slightly ahead of analysts' estimates calling for a 77% gain to $0.23 per share.

"We continue to make progress on our strategic priorities that enhance our in-store and connected customer experience, which are resonating with both consumers and Pro customers across the country," said Chief Executive Officer Tom Taylor in a press release. "As we look to the remainder of 2018 and beyond, we remain focused on executing our key growth strategies as we capitalize on the significant growth opportunity that exists for Floor & Decor."

Three rows of different types of hardwood flooring displayed in store.

Image source: Getty Images.

Now what

It was a solid quarter for the company and management even increased guidance, so why did the stock dip 9.3% during early trading? Most likely because even with the increased guidance, it wasn't quite up to Wall Street expectations. Management bumped full-year revenue guidance from $1.69 billion to $1.73 billion up to $1.705 billion to $1.735 billion, which fell below analysts' calling for $1.747 billion. Management also moved full-year adjusted EPS to a range of $0.93 to $1.01, up from prior guidance of $0.91 to $1, which only meets analysts' estimates of $1 at the high end of the range.

Long-term investors should ignore today's volatility in the company's stock price as it was a solid quarter with raised guidance. If management continues to execute its growth strategies, today's slightly lower-than-expected guidance is a complete nonfactor.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Floor & Decor Holdings Stock Quote
Floor & Decor Holdings
FND
$64.97 (3.19%) $2.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.