A key support level has emerged in the chart of Floor & Decor Holdings Inc (FND). If this level is surpassed, a breakdown could occur.
FND operates as a specialty retailer in the hard surface flooring market. Its stores offer a range of tile, wood, laminate, and natural stone flooring products, as well as decorative and installation accessories at everyday low prices.
The company thrived during the pandemic even though its business is built around in-store shopping. Its sales were up 31% year over year in its most recent quarter. This growth is attributed to its large and loyal professional customer base. Management plans to increase its store count by 20% per year until it hits 400 locations.
FND had $271 million in cash as of the end of the latest quarter, compared with only $3 million in short-term debt. The company has a current ratio of 1.6 and a return on equity of 18.6%.
The stock has seen its revenue grow 9% over the past year and earnings rise 13.9%. Sales are expected to grow 22.6% this year. FND had a strong 12 months in price gains which has resulted in a trailing P/E of 64.84.
Most recently though, the stock is down over 8% in the past five days, and up only 1.1% for the year. It has a rating of Buy in our POWR Ratings system, down from a Strong Buy earlier in the month.
Take a look at the 1-year chart of FND below with added notations:
FND has formed a key level of support at $90 (green) over the past several weeks. The stock has fallen back down to that $90 level again, and so far, another bounce has come. However, if the support were to break, lower prices would likely follow for FND.
If the stock were to break below the $90 support level, a short position could be entered with the expectation of a breakdown.
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FND shares were trading at $91.26 per share on Friday morning, down $2.60 (-2.77%). Year-to-date, FND has declined -1.71%, versus a 0.23% rise in the benchmark S&P 500 index during the same period.
About the Author: christian
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...
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