Floor & Decor Holdings, Inc. (FND) Stock Analysis
Floor & Decor Holdings, Inc. (FND) Stock Analysis
Overall Grade: F (Concerning)
View interactive company profile →
Floor & Decor Holdings, Inc. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 9.8% | Near cost of capital |
| FCF Margin | 9.1% | Healthy cash flow |
| Debt/Equity | 0.1x | Conservative leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is Floor & Decor Holdings, Inc.'s Profitability and ROIC?
Floor & Decor Holdings, Inc.'s return on invested capital of 9.8% is around industry norms. Gross margin of 43.7% with operating margin at 5.9% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 9.8% | Adequate | Adequate returns |
| Return on Equity (ROE) | 9.7% | Adequate | Moderate equity returns |
| Gross Margin | 43.7% | Good | Strong pricing power |
| Operating Margin | 5.9% | Adequate | Moderate operational efficiency |
How Strong is Floor & Decor Holdings, Inc.'s Cash Flow Quality?
Floor & Decor Holdings, Inc. generated $417.0M in free cash flow over the trailing twelve months, representing a 9.1% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 2.0x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 9.1% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $417.0M | Good | Positive cash generation |
| OCF/Net Income | 2.0x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is Floor & Decor Holdings, Inc.'s Financial Health?
Floor & Decor Holdings, Inc.'s debt-to-equity ratio of 0.1x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.1x | Excellent | Conservative capital structure |
| Net Cash Position | $-19.5M | Adequate | Net debt position |
Is Floor & Decor Holdings, Inc. Stock Overvalued or Undervalued?
Floor & Decor Holdings, Inc. trades at a P/E of 38.7x, representing a premium to the sector median of N/A.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 38.7x | Adequate | Premium valuation |
| EV/Sales | 1.3x | Excellent | Attractive revenue multiple |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 9.8% | Bottom 50% | 1.0x below |
| Free Cash Flow Margin | 9.1% | Top 25% | 2.8x above |
| Gross Margin | 43.7% | Top 50% | 1.1x above |
| Operating Margin | 5.9% | Top 50% | 1.2x above |
| Return on Equity (ROE) | 9.7% | Bottom 50% | 0.8x below |
| P/E Ratio | 38.7x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 9.8% (Adequate - Bottom 50% of sector (median: 9.8%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 9.1% (Adequate - Top 25% of sector (median: 3.2%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 43.7% (Good - Top 50% of sector (median: 40.9%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 8.6% (Excellent)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 38.7x (Adequate)
Frequently Asked Questions
Q: What is Floor & Decor Holdings, Inc.'s Return on Invested Capital (ROIC)?
Floor & Decor Holdings, Inc. (FND) has a trailing twelve-month Return on Invested Capital (ROIC) of 9.8%. This compares below the sector median of 9.8%. An ROIC near 8-12% is approximately the cost of capital for most companies.
Q: What is Floor & Decor Holdings, Inc.'s Free Cash Flow Margin?
Floor & Decor Holdings, Inc. (FND) has a free cash flow margin of 9.1%, generating $417.0 million in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is Floor & Decor Holdings, Inc. stock overvalued or undervalued?
Floor & Decor Holdings, Inc. (FND) trades at a P/E ratio of 38.7x, which is above the sector median of N/A. The EV/Sales multiple is 1.3x.
Q: How does Floor & Decor Holdings, Inc. compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, Floor & Decor Holdings, Inc. (FND) shows: ROIC of 9.8% is below the sector median of 9.8% (Bottom 49%). FCF margin of 9.1% exceeds the sector median of 3.2% (Top 20% of sector). Gross margin at 43.7% is 2.8 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with Floor & Decor Holdings, Inc.?
Floor & Decor Holdings, Inc. (FND) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-10-30. TTM metrics as of Q2 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.