Benzinga - by Nabaparna Bhattacharya, Benzinga Editor.
Telsey Advisory Group analyst Joseph Feldman reiterated the Market Perform rating on Floor & Decor Holdings, Inc. (NYSE: FND), lowering the price target to $90 from $105.
Floor & Decor will report 3Q23 earnings on Thursday, November 2.
The analyst expects 3Q23 sales to increase 3% YoY to $1.1 billion, on a lower comp of (9.0%) vs. (8.5%) previously.
As of August 3, Floor & Decor's 3Q23-to-date comp was (8.4%) vs. a tough comparison of 13% through August 4, 2022.
The analyst adds that sales likely remained challenged through the balance of 3Q23, going against comps of 14% and 10% in August and September 2022, respectively.
In the near term, Floor & Decor's business is likely to remain under pressure from the weak housing market trends and lapping the solid pandemic-related gains, according to the analyst.
The housing market has remained weak as existing home sales declined 16% in 3Q23, the analyst adds.
Feldman now projects a 3Q23 operating margin contraction of ~210 bps to 7.2% vs. 7.4% previously, reflecting inflation and higher store operating expenses.
The analyst expects gross margin expansion of 160 bps to 42.4%, driven by higher product margins on lower freight rates.
Feldman now forecasts SG&A expense ratio deleverage of ~360 bps to 35.1% vs. 35.0% previously, given the softer sales forecast and new store openings.
The analyst lowered the 2023 EPS estimate to $2.39 from $2.45.
Price Action: FND shares are trading lower by 2.26% to $78.93 on the last check Wednesday.
Latest Ratings for FND
| Feb 2022 | Loop Capital | Maintains | Hold | |
| Feb 2022 | Telsey Advisory Group | Maintains | Outperform | |
| Feb 2022 | Wells Fargo | Maintains | Overweight |
View the Latest Analyst Ratings
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