What Happened?
Shares of specialty flooring retailer Floor & Decor (NYSE: FND) fell 3.8% in the afternoon session after analysts lowered their price targets on the stock following its latest earnings report. Wolfe Research cut its price target on Floor & Decor to $58 from $76, while keeping an Underperform rating. Similarly, TD Cowen trimmed its price target to $77 from $80, maintaining a Hold rating. The negative sentiment from analysts came even as the company's third-quarter earnings per share of $0.53 beat expectations. However, investors focused on a 1.2% year-over-year decline in comparable store sales, which fell short of analyst projections and pointed to slowing customer demand.
The shares closed the day at $59.62, down 4.7% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Floor And Decor? Access our full analysis report here.
What Is The Market Telling Us
Floor And Decor’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 2.6% on the news that it gave back a portion of the previous day's gains that followed a strong third-quarter earnings report. The company's stock had initially jumped 6.2% after it beat analysts' profit expectations and announced a positive turn in a key sales metric. For the quarter, Floor & Decor posted revenue of $1.18 billion, meeting expectations, while its GAAP profit of $0.53 per share comfortably beat the consensus estimate of $0.46. Importantly, same-store sales grew 1.2% year-on-year, a significant turnaround that investors initially cheered. The subsequent drop suggests that despite the solid performance and upbeat guidance, which included an increased full-year EPS forecast, some investors may be taking profits amid broader market caution or reacting to more tempered analyst outlooks following the report.
Floor And Decor is down 38.8% since the beginning of the year, and at $59.64 per share, it is trading 50% below its 52-week high of $119.22 from November 2024. Investors who bought $1,000 worth of Floor And Decor’s shares 5 years ago would now be looking at an investment worth $754.75.
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