Negative: Bearish thesis on Floor & Decor Holdings, Inc. suggests stock has significant potential for decline.

From Yahoo Finance: 2025-05-07 12:50:00

Traditional-Year3847 on wallstreetbets Subreddit Page shared a bearish thesis on Floor & Decor Holdings, Inc. (FND). Share price was $71.44 as of April 30th, with trailing and forward P/E ratios of 37.60 and 34.25, respectively. The company’s expansion model, deteriorating fundamentals, and accounting practices suggest a risky investment. Bears predict a 37% downside with a $45 price target. Wall Street analysts and hedge funds are overlooking the company’s true leverage and financial health. Floor & Decor’s reliance on off-balance-sheet lease obligations, reverse factoring, and supply chain finance obscures its true debt profile and liquidity. This, combined with declining same-store sales, increasing capex, and questionable management practices, paints a concerning picture for the company’s future. The lack of financial disclosure by segment, management’s performance incentives, and insider trading trends further suggest underlying issues in the business. Frequent changes in accounting policies and disclosure practices create a financial black box that makes assessing core risks challenging. The aggressive expansion plan despite signs of saturation and weakening traffic indicates a company chasing growth at the expense of long-term viability. Overall, Floor & Decor is viewed as a risky investment with significant potential for decline if current issues are left unaddressed. Hedge funds are decreasing their holdings in FND, while other AI stocks offer greater promise for delivering higher returns in a shorter timeframe. If you are seeking an AI stock with more potential than FND trading at less than 5 times its earnings, consider exploring other options. This article originally appeared on Insider Monkey.

Read more: Floor & Decor Holdings, Inc. (FND): A Bear Case Theory