INTERFACE INC (TILE): what the price assumes

In the published model solve dated 2026-Q2, anchored at $35.20, INTERFACE INC (TILE) is priced for +12.6% growth. 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 2026-07-11.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/TILE

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 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.8pp.

Reconcile: at the x-ray's 9.3% required return this reads ~3.4%/yr; the models below use their own rates.

How unusual the bet is: within-range

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

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 justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Bullet Takeaways

• Interface is converting modest sales growth into outsized profit growth: the latest quarter delivered operating income up 39.2% on revenue up 11.3%, and full-year 2026 sales guidance was raised to $1.45 to $1.48 billion.
• The specific risk is persistence, not level: today's price needs roughly 13.5% annual operating-income growth for about five years, a pace the company has recently delivered but one that only about 47% of comparable growers sustained that long, in an industry the FY2025 10-K describes as crowded with manufacturers adding capacity.
• Watch the second-quarter report against management's own bar of $385 to $395 million in sales and roughly 39.9% gross margin, plus tariff developments on the imported LVT and rubber flooring lines the 10-K flags as a cost exposure.

Bull Case

One number does most of the work here: operating income grew 39.2% year over year in the latest quarter on revenue growth of 11.3%. That three-to-one ratio of profit growth to sales growth is operating leverage working exactly as designed, and it echoed through the whole print, with GAAP diluted EPS rising to $0.40 from $0.22 and adjusted EBITDA reaching $46.8 million, 14.1% of net sales. Currency-neutral sales grew 6.8%, so this is not merely a translation effect; carpet tile billings rose double digits, led by Corporate Office up 16% and Healthcare up 11% globally. When a mid-cycle industrial posts an 80% EPS gain and then raises full-year guidance, the burden of proof shifts to the skeptics.

Management did raise it: full-year 2026 net sales guidance moved to $1.45 to $1.48 billion with adjusted gross margin of 38.8% to 39%, against $1.42 billion of trailing revenue. The design-led, accessible-price-point strategy is visibly taking share in a fragmented market; the FY2025 10-K notes the flooring industry has consolidated significantly yet still carries a large number of manufacturers, which is precisely the environment where a branded specialist with distribution scale grinds out share. The two-segment structure, AMS across the United States, Canada, and Latin America plus EAAA covering everything else per the 10-K, gives the growth multiple engines; the filing shows AMS adjusted operating income climbing to 13.3% of net sales in 2024 from 11.9% the year before, evidence the margin gains predate this quarter's pop.

The financial quality underneath is better than the fundamental scorecard's weak reading suggests. Return on equity runs near 20%, trailing free cash flow of $120.7 million is a 6.2% yield on the $1.96 billion market value with all four quarters positive, debt sits at a moderate 0.32x equity, well covered, and the composite bankruptcy-risk read is comfortably in the safe zone. The price is not asking for heroics either: the margin the valuation ultimately requires is below what the company already earns, so the bet is simply that the current growth keeps running. Recent evidence says it is accelerating, not fading.

Bear Case

The uncomfortable observation is what Interface actually sells into: corporate office fit-outs, the single most deferrable capital expense in commercial real estate. The company's fortunes track decisions made by facilities managers about whether this is the year to re-carpet the office, and the current billings strength in Corporate Office is a recovery in precisely the demand stream that vanishes first in a downturn. The price has moved to capture that recovery as if it were a permanent feature; the steady-state reading of the business says otherwise, with earnings-power methods placing the price at about 2.1x what normalized profits support and asset-based methods at 1.5x. The support for today's $33.22 (July 11, 2026) comes entirely from the frames that extend the recent trajectory forward.

That trajectory has cracks the headline quarter obscures. Sequentially, revenue has declined three straight quarters, from $375.5 million to $331.0 million, gross margin has drifted from 39.4% to 38.3%, and operating margin from 13.9% to 9.8%. The fundamental scorecard is weak at 4 of 9 checks: operating cash flow ran below net income, debt increased, the share count grew, and both gross margin and asset turnover deteriorated year over year. Free cash flow in the latest quarter was $3.2 million, a thin residue after working capital. None of this is distress, but it is not the profile of a company that just earned a growth multiple either.

The structural pressures are documented in the company's own filing. The FY2025 10-K warns that trade-policy changes may bring increased costs for imported LVT and rubber flooring products, supply chain disruptions, and reduced demand, a direct margin exposure in the hard-surface lines Interface resells. The same filing notes that competitors continually add or modify manufacturing capacity around the globe in an industry that remains crowded despite consolidation, which is how pricing power erodes in flooring. What the price requires, about 13.5% annual operating-income growth held for five years, has been sustained by fewer than half of comparable growers historically. A cyclical end market, a fading sequential tape, and a tariff overhang make that persistence bet considerably harder than the latest year-over-year comparison suggests.

Valuation

The methods split two against two, and the split maps exactly onto the question that matters. Peer multiples read the price at about 0.6x what they support, and growth-crediting methods at 0.9x, so on relative and forward frames the stock is inexpensive, consistent with a 15.5x trailing P/E against an 18x sector median and 10.3x EV/EBITDA against a 12x sector norm. The earnings-power frame reads the same price at 2.1x what it supports, and asset-based methods at 1.5x, because five-year average operating income is far below the current run-rate; a business that recently earned much less than it earns today looks expensive to any method that averages the past. Which pair is right depends entirely on whether the recent earnings level is the new baseline or the top of a swing.

What the price is betting is specific: at about 13x company-wide operating income, it implies operating growth near 13.5% a year for roughly five years. The rate is within what Interface has recently delivered, the latest quarter grew operating income 39.2% year over year, so the stretch is duration; about 47% of comparable growers held such a pace for five years. Notably, the price does not demand margin expansion: the margin the valuation requires by the out-years is about 7.8%, below the roughly 12.2% the company earns today, so longevity of growth, not profitability improvement, is the entire ask. The filing-sourced inputs frame the base: trailing revenue of $1.42 billion against management's raised FY2026 guidance of $1.45 to $1.48 billion, and the 10-K's two-segment structure with AMS adjusted operating income at 13.3% of net sales in 2024, up from 11.9%.

The balance sheet keeps the downside ordinary rather than existential: debt at 0.32x equity and well covered, a 2.43 current ratio, a composite bankruptcy-risk score of 4.28 in the safe zone, and $120.7 million of trailing free cash flow, a 6.2% yield, with all four quarters positive. The dividend is negligible and the share count is not shrinking, so the return case rests on the growth persisting. The number to watch is sequential revenue: three straight quarters of decline against guidance that implies a second-half reacceleration is the tension the next two prints resolve.

Catalysts

Management set clear near-term markers. Second-quarter guidance calls for net sales of $385 to $395 million with gross margin around 39.9%, a steep sequential step up from $331.0 million that would confirm the order momentum the billings data showed, with carpet tile billings up double digits, Corporate Office up 16%, and Healthcare up 11% globally in the first quarter. The full-year outlook was raised to $1.45 to $1.48 billion of net sales with adjusted gross margin of 38.8% to 39%, adjusted SG&A of 26.2% to 26.4% of sales, and roughly $60 million of capital expenditures. Hitting the Q2 range matters more than usual because the trailing tape shows three sequential revenue declines; the guide is effectively a claim that the inflection has arrived.

The first quarter beat expectations by a wide margin, with adjusted EPS of $0.41 against a $0.31 forecast, and the stock responded, so the bar has reset higher into the next print. The external variables are trade policy and the office cycle: the FY2025 10-K flags tariffs as a direct cost risk on imported LVT and rubber flooring, so tariff pauses or escalations move the hard-surface margin either way, while corporate office leasing and fit-out activity drives the largest billings vertical. Currency is a quieter swing factor, given the gap between reported growth of 11.3% and currency-neutral growth of 6.8% last quarter; a reversal in exchange rates would compress reported numbers even if demand holds.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• MHK (MOHAWK INDUSTRIES, INC.)
• FY2025 10-K: …in the annual budget and forecasting process. The CODM considers forecast-to-actual variances in Operating income (loss) on a monthly basis when making decisions about allocating resources to the segments. Other segment items included in the computation of segment Operating income (loss) include impairment of…
• FY2025 10-K: , for further discussion of the Company's impairment charges. 33 Table of Contents Index to Financial Statements Operating income (loss) Operating income for 2024 was $693.5 million compared to operating loss of $291.9 million for 2023. The change was primarily attributable to lower impairment charges to reduce the…
• CSL (CARLISLE COMPANIES INCORPORATED)
• FY2025 10-K: …initiatives contributed to revenue growth, and we are well-positioned to capitalize on the growing need for energy-efficient weatherproofing solutions. North America is the most attractive building-products market globally, supported by strong, long-term fundamentals including the demand for energy-efficient…
• FY2025 10-K: …coating systems for a wide variety of thermal protection applications and other premium polyurethane products, block-molded expanded polystyrene insulation, engineered products for HVAC applications, and premium products for a variety of industrial and surfacing applications. Carlisle's chief operating decision maker…
• MAS (Masco Corporation)
• FY2025 10-K: …conditions, we are experiencing, and may continue to experience, lower market demand for our products. We have been experiencing, and may continue to experience, elevated commodity and other input costs, as well as employee-related cost inflation. Additionally, we have been experiencing, and may continue to…
• FY2025 10-K: …factors have impacted and could in the future impact our results of operations and financial position. In addition, our relationships with our customers, including home center retailers, may be impacted if we increase the amount of business we transact in the e-commerce channel. If we are unable to maintain our…
• LEG (LEGGETT & PLATT INC)
• FY2025 10-K: …energy intensive and depends on electricity and other utilities at commercially reasonable rates. Periods of extreme weather, including prolonged hot or cold weather events, have increased and may continue to increase overall electricity and natural gas demand, place stress on regional power grids, and contribute to…
• FY2025 10-K: …in place. In Furniture, Flooring & Textile Products, our Home Furniture operations in China primarily sell components to Asian customers who export finished furniture to the United States. Our Chinese operations experienced meaningful disruptions early in the second quarter of 2025, including shipment delays, order…
• LZB (LA-Z-BOY INCORPORATED)
• FY2025 10-K: …North America La-Z-Boy branded upholstery business, mainly driven by sales to our Retail segment along with growth from our major wholesale dealers, combined with a favorable shift in product mix toward higher price products. The increase in sales was partially offset by a significant customer transition in our…
• FY2025 10-K: …and experience, omnichannel presence, and advertising. Changes in pricing and promotional activities of competitors may adversely affect our performance. In addition, due to the large number of competitors and their wide range of product offerings, we may not be able to 11 Table of Contents differentiate our products…

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.
• 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.