Floor and Décor shares looking strong after IPO Quiet period expiration

By : Victor Kanake

Going public might boost a company’s ratings for a day or two. Maybe even for a week. However, it takes a certain type of company to keep up a good performance. Floor and Décor is one such company.

Floor and Décor (NYSE: FND) is a firm that’s synonymous with the housing industry, right there next to big store labels like Home Depot Inc. and Tile Shops Holdings Inc. Floor and Décor was formed in 2000 and is based in Atlanta. The major house furnishing retailing store has many branches across the US. With its unique business services (it does everything from natural housing material to installation of wall accessories for homeowners) and improving financials, many investors were bullish on the company’s IPO. And the past few weeks have shown that they were right to label the firm bullish.

After an IPO, a company’s shares can trade at the IPO price, below it or above it. When Floor and décor was starting out, its shares were trading at $21 apiece. The firm had sold off about 8.82 million of its common stock at this price during the IPO.by the end of the first week of trading, Floor and Décor shares had risen in value by +11%. And that was not all. In the weeks that followed, Floor and Décor delighted investors by selling at lows of $29.37 and highs of $43.10, both of which are way above the firm’s initial pricing.

You could say that the initial performance of Floor and Décor post-IPO was a bit slow, but it caught on well enough. The share price got a bump when Floor and Décor confirmed that it was buying up a site in San Antonio. Since expansion is always a good thing when you have the infrastructure to carry it out, analysts were encouraged by the move. The second major bump, one that saw the firm’s hit the all-time high this week, consisted of two agendas.

In the first, analysts released their ruling on the company’s stock this week. Here are some of them. Credit Suisse stated analysts rated Floor and Décor shares as likely to outperform at $42 per share. While Piper Jaffray considered the stock neutral, it estimated that the stock would continue trading at $40 each. Barclays rated Floor and Décor as overweight at $50 a share while Goldman Sachs fell out of the bracket and rated them neutral at $20 each. While the Goldman Sachs rating was a tad negative, the other recommendations were positive. Coming from big names like Barclays Capital and Credit Suisse, the recommendations were encouraging to investors, so the share price shot up.

Reason number two that Floor and Décor hit the ceiling is that the company released their 1Q17 financials this week and they are glowing. According to the financial report the company issued on Monday, net sales are up 30.6% from the same period of 2016. The firm’s beta is also at 0.44, a sign that the company is stable and will remain so for quite some time. Couple that with increased sales per shop and increased number of shops and you have yourself a company that is set for outperformance in the next few months.