Summary
- Floor & Decor is down 29% in 2022 compared to the S&P 500’s slide of 13%.
- Floor & Decor is a profitable growth company with a reasonable path to $15 billion in revenue and 500 stores by 2030.
- There’s a lot to like about Floor & Decor aside from the fact Buffett owns a stake.
- Floor & Decor has a good chance of providing market-beating returns to patient investors over the next several years.
Investment Thesis
Floor & Decor (NYSE:FND) has received a lot of press over the past couple years after Berkshire Hathaway (BRK.A) (BRK.B) disclosed a stake in the specialty retailer of hard surface flooring and accessories. Personally, I’m of the opinion it wasn’t Warren Buffett himself who initiated the position in Floor & Decor but was most likely one of his portfolio managers. Regardless, the fact Berkshire thought enough of Floor & Decor to add it to the portfolio is definitely a vote of confidence.
There’s a lot to like about Floor & Decor aside from the fact Buffett has a stake. Over the past 10 years, the company has grown revenue at a 28.7% CAGR and EPS at a 42.4% CAGR. Floor & Decor continues to open additional warehouse stores with a target of 500 total (US) over the next 8-10 years. Currently, Floor & Decor operates 174 warehouse stores which leaves a long runway for growth.
