Floor & Decor Holdings (NYSE:FND) sheds 3.7% this week, as yearly returns fall more in line with earnings growth
The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. For example, the Floor & Decor Holdings, Inc. (NYSE:FND) share price has soared 101% in the last half decade. Most would be very happy with that. It’s also good to see the share price up 28% over the last quarter. This could be related to the recent financial results, released recently – you can catch up on the most recent data by reading our company report.
Since the long term performance has been good but there’s been a recent pullback of 3.7%, let’s check if the fundamentals match the share price.
Check out our latest analysis for Floor & Decor Holdings
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During five years of share price growth, Floor & Decor Holdings achieved compound earnings per share (EPS) growth of 20% per year. This EPS growth is higher than the 15% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Floor & Decor Holdings’ earnings, revenue and cash flow.
A Different Perspective
While it’s never nice to take a loss, Floor & Decor Holdings shareholders can take comfort that their trailing twelve month loss of 4.8% wasn’t as bad as the market loss of around 10%. Longer term investors wouldn’t be so upset, since they would have made 15%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we’ve identified 1 warning sign for Floor & Decor Holdings that you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
What are the risks and opportunities for Floor & Decor Holdings?
Floor & Decor Holdings, Inc. together with its subsidiaries, operates as a multi-channel specialty retailer and commercial flooring distributor in Georgia.
View Full Analysis
Trading at 8.7% below our estimate of its fair value
Earnings are forecast to grow 21% per year
Earnings grew by 5.3% over the past year
High level of non-cash earnings
Significant insider selling over the past 3 months
View all Risks and Rewards
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.