Floor & Decor Holdings, Inc. (FND): what the price assumes

In the published model solve dated 2026-Q2, anchored at $53.00, Floor & Decor Holdings, Inc. (FND) is priced for today's economics sustained for ~5.7 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/FND

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 11: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.9% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.

Per-Model Detail (n=16)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Sales at stores open a year or more fell 3.7 percent in the first quarter of fiscal 2026, and the company still opened six new warehouse stores in the same thirteen weeks, ending with 276.
• Pricing power is holding even as volume slips: the 10-Q reports that "The increase in gross margin was primarily driven by strategic pricing initiatives, partially offset by an increase in supply chain costs."
• Management guided fiscal 2026 to comparable store sales of roughly negative 4 percent to flat with diluted earnings of about $1.83 to $2.08 a share, while committing 250 to 300 million dollars of capital spending and authorizing 400 million dollars of buybacks.

Bull Case

Authorizing 400 million dollars of share repurchases in the same announcement that reports comparable store sales down 3.7 percent is a specific kind of statement, and it is worth taking seriously rather than dismissing. Against a company valued a shade under 5.9 billion dollars, that authorization is a meaningful slice. It was made possible by a balance sheet that has quietly strengthened through the downturn: cash on hand reached 293.6 million dollars at the end of March 2026, up from 249.3 million at the close of fiscal 2025, against funded borrowings of 196.1 million. In June 2026 the company refinanced those borrowings into a new 200 million dollar senior secured term loan running to June 2033. Interest is guided at roughly 4 million dollars net for the full fiscal year, which against a quarter of a billion dollars of annual operating profit is close to a rounding error.

What that balance sheet buys is the ability to keep building while competitors cannot. Six new warehouse stores opened in the first quarter alone, and the plan calls for 20 across fiscal 2026 against a stated long-term opportunity of 500 stores in the United States, roughly double today's 276. Retail land and construction is cheapest exactly when demand is weakest, and a chain that can sign leases through a downturn compounds store count against rivals who are conserving cash.

The more surprising evidence is on the margin line. In a quarter when volume declined, gross margin went up, and the 10-Q is specific about why: "The increase in gross margin was primarily driven by strategic pricing initiatives, partially offset by an increase in supply chain costs." A specialty retailer that can take price into falling traffic has something durable, because the alternative during weak demand is always discounting. At roughly 44 percent, the gross margin sits near the top of a comparison group that includes FAST at 44.9 percent, TSCO at 36.4 percent and BLDR at 29.9 percent, with only SHW higher at 49.0 percent. Direct sourcing and private-label depth are what produce that spread, and neither disappears when housing turnover recovers.

Underneath the reported numbers sits an accounting drag that a longer view sees through. Depreciation is guided at about 250 million dollars for fiscal 2026, and capital spending at 250 to 300 million. Almost all of that depreciation belongs to stores already built and running, while the capital spending is buying stores that will not contribute a full year of sales until later. Reported earnings therefore carry the full cost of the expansion and only part of its benefit. The bear will answer that this is true of every expanding retailer right up until the expansion stops working, which is fair. But a company generating cash, adding stores, holding price and buying back stock simultaneously is not a company in trouble; it is one whose current earnings understate a mature store base it does not yet have.

Bear Case

Two capital decisions were announced on the same day and they point in opposite directions. Floor & Decor authorized 400 million dollars of share repurchases while committing 250 to 300 million dollars to new stores, in a year it guided to comparable store sales of negative 4 percent to flat. The chief executive was explicit about the reasoning, saying the company believes "today's uncertain economic environment has created a disconnect between our long-term intrinsic value and our share price." Management is entitled to that view. It is worth noticing that no family of valuation method agrees with it: asset-based, earnings-power and peer-multiple approaches all land materially under today's quote.

Run the returns arithmetic on the expansion and the tension sharpens. Book value stands at $22.64 a share, and management's own fiscal 2026 guidance calls for diluted earnings of roughly $1.83 to $2.08. That is a return on the shareholders' capital in the eight to nine percent range, on a business that costs close to 29 times its annual operating profit. Capital deployed at single-digit returns and valued at a multiple that assumes far better is the central problem the price has to solve, and opening 20 more stores into flat comparable sales does not obviously solve it.

The obligations that matter are not the ones on the debt line. Funded borrowings are modest, but a warehouse-format retailer's real commitment is its leases, and those totalled roughly 1.81 billion dollars at the end of March 2026 on a lease-liability basis, split between 160.5 million due within the year and 1,650.0 million after. That is nine times the funded borrowings. Rent on a big box is contracted for a decade or more and does not care what comparable sales did last quarter, and every one of the 20 stores planned for this year adds to the total. Operating leverage cuts both ways, and this is the direction it cuts in a downturn.

Demand, meanwhile, is doing what the filings warn it can. Operating income fell 18.4 percent year over year in the first quarter and the operating margin lost 100 basis points to 4.5 percent. The annual report is candid that "the potential significance and duration of these macroeconomic difficulties is uncertain, and further pressures on the housing market could have an adverse impact on our business", and the quarterly filing lists among its risks "adverse changes in global trade policies, tariffs, or import enforcement actions, any of which could impact our ability to import from foreign suppliers, raise our costs, or disrupt our supply chain". For a retailer whose sourcing advantage runs through overseas factories, that second one is not a boilerplate risk. It is the mechanism behind the gross margin the bull case rests on.

Set all of that against what the price requires. It asks operating growth to run at the ceiling the business can fund from its own profits and to hold there for about 7 years, a pace only around 21 percent of comparable fast-growing companies have sustained that long. The multiple sits at the very top of its peer distribution, well beyond the upper quartile. The company is currently guiding to shrinking comparable sales.

Valuation

A configuration this clean shows up rarely: not one family of valuation method reaches today's quote. Approaches built on book value and profitability, approaches built on earnings power, and approaches built on peer multiples all land materially underneath, and the forward-growth approaches, which credit expansion the others structurally cannot, come closest without getting there either. When nothing anchored in observable economics reaches the price, the price is a bet beyond what any standard frame encodes.

Put a number on the requirement and it becomes concrete. Close to 29 times a year's operating profit is what the shares cost, and to make that arithmetic hold you assume growth runs at the ceiling the business can fund from its own retained profits and stays there for about 7 years. Shave a point off the growth rate and the required horizon extends by roughly 1.8 years. Around 21 percent of comparably fast-growing companies have held such a pace that long, and against its own peer group the multiple sits at the very top of the distribution, well beyond the upper quartile.

One model is worth naming because of how it fails to reach. The exit-multiple cash-flow approach projects five years of growth and then assumes the business is sold at exactly the multiple of earnings before interest, tax, depreciation and amortization it commands today, held flat with nothing compressing. That is the most generous terminal assumption in the standard toolkit, and the price still stands above where it lands. When even the method that assumes no multiple compression cannot reach the quote, the premium is not a dispute about the terminal year.

The recent operating record is what makes the requirement look heavy rather than merely ambitious. First-quarter net sales of 1,152.3 million dollars slipped 0.7 percent, comparable store sales fell 3.7 percent, and the operating margin gave up 100 basis points to 4.5 percent. Management's fiscal 2026 guidance points to comparable store sales of roughly negative 4 percent to flat and diluted earnings of about $1.83 to $2.08 a share. Neither figure describes a business currently compounding at any ceiling.

Solvency is genuinely not the issue, provided the basis is named. On funded borrowings the company holds 293.6 million dollars against 196.1 million of loans, refinanced in June 2026 into a 200 million dollar facility maturing in 2033, with interest guided near 4 million dollars for the year. On a lease-inclusive basis the obligations are an order of magnitude larger, roughly 1.81 billion dollars of lease liabilities, which is the honest measure of what a store network commits to. The final thing to weigh is where the money is going: capital spending guided at 250 to 300 million dollars against depreciation of about 250 million means essentially the entire depreciation charge is being recycled into 20 new stores, and those stores are the growth the price is capitalizing.

Catalysts

The first-quarter print on April 30, 2026 carried both the disappointment and the response. Net sales of 1,152.3 million dollars declined 0.7 percent, comparable store sales fell 3.7 percent, and diluted earnings came in at $0.37 against $0.45 a year earlier, which chief executive Brad Paulsen attributed to elevated mortgage rates, geopolitical tension and weaker consumer sentiment weighing on big-ticket discretionary spending. Alongside it the board authorized a share repurchase program of up to 400 million dollars, the first of that scale in the company's history as a public issuer.

Full-year guidance issued the same day sets the bar for the rest of fiscal 2026, which includes a 53rd week. Net sales are guided to roughly 4,770 million to 4,990 million dollars, with the extra week contributing about 65 million; comparable store sales to approximately negative 4 percent to flat; diluted earnings to about $1.83 to $2.08 a share, of which the extra week supplies about $0.08; and capital spending to 250 to 300 million dollars against 20 planned new warehouse stores. The comparable-sales range is the number to watch, because the entire spread between the top and bottom of the earnings guidance sits inside it.

The financing side was settled in June. On June 24, 2026 the company refinanced its senior secured term loan with a new 200 million dollar facility maturing June 24, 2033, priced at an adjusted term benchmark rate plus 2.00 percent, with an incremental feature allowing the facility to be enlarged. That removes a near-term maturity from the picture and leaves the store program and the repurchase authorization funded from operating cash rather than from a refinancing calendar.

Peer Cohorts (Per Segment, With Filing Citations)

Retail (single reportable segment) (reported)

• BLDR (Builders FirstSource, Inc.)
• FY2025 10-K: …and where applicable, we generally would incur these costs whether or not we ultimately obtain the contract. We do not disclose the value of our remaining performance obligations on uncompleted contracts as our contracts generally have a duration of one year or less. The timing of revenue recognition, invoicing and…
• FY2025 10-K: Because our customers are dispersed among our various markets, our credit risk to any one customer or geographic economy is not significant. Our customer mix is a balance of large national homebuilders, regional homebuilders, local and custom homebuilders and repair and remodeling contractors as well as multi-family…
• TSCO (TRACTOR SUPPLY CO /DE/)
• FY2025 10-K: …intangible assets impairment charges recognized in fiscal 2025. 33 Table of Contents Results of Operations The following table sets forth, for the periods indicated, certain items in the Consolidated Statements of Income expressed as a percent of net sales. Fiscal Year 2025 2024 Net sales 100.00 % 100.00 % Cost of…
• FY2025 10-K: …retail stores). Given the size of the communities that we target, we believe there is ample opportunity for new store growth in many existing and new markets. We believe we have developed a proven method for selecting store sites and have significant additional opportunities for new Tractor Supply stores. We also…
• FAST (FASTENAL CO)
• FY2025 10-K: …segment net sales, ROA pre-tax profit, and ROA assets, we do not consider them reportable segments. Therefore, we report the results of our one reportable segment (U.S.) below. Further details on our significant accounting policies can be found in Note 1, which are applied company wide. Our segment measure of profit…
• FY2025 10-K: …"smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer x Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the…
• SHW (THE SHERWIN-WILLIAMS COMPANY)
• FY2025 10-K: …share of the allocation base. The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM and include intersegment expenses within the amounts shown. Identifiable assets were those directly identified with each Reportable Segment. 94 Table of Contents…
• FY2025 10-K: …in long-term growth initiatives, including increased spending from net new store openings and costs to support higher sales. The Consumer Brands Group's SG&A increased $32.8 million, or 3.8% for the year primarily due to costs related to the October 2025 Suvinil acquisition, increased marketing & advertising and…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.