Floor & Decor Holdings' (FND) "solid" Q4 results and flow through could encourage investors, but a more balanced outlook to account for macro environment is called for, UBS said in a note emailed Monday.
The company benefited from storm-related building, which could continue to benefit the company in the next few quarters. An improvement in existing home sales also benefited the company's sales, UBS analysts said. Existing home sales grew each month in Q4, with December up by around 11%, but the company said that affordability remains challenging and steady interest rate cuts seem less likely.
The analysts said that the timing and magnitude of the recovery in flooring and hard surfaces is still unclear, but Floor & Decor is actively trying to improve its business model.
The company's outlook for 2025 and Q1 trends nudged UBS to lower its revenue growth estimate to 8.5% from 13.2%. It also lowered its earnings estimates for full-year 2025 to $2.10 per share from $2.35 per share, and for full-year 2026 to $3.25 per share to $3.45 per share.
UBS maintained the company's rating at neutral and price target at $115.
Price: 97.45, Change: +3.18, Percent Change: +3.37
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