Are Robust Financials Driving The Recent Rally In Floor & Decor Holdings, Inc.’s (NYSE:FND) Stock?

Most readers would already be aware that Floor & Decor Holdings’ (NYSE:FND) stock increased significantly by 30% over the past three months. Given the company’s impressive performance, we decided to study its financial indicators more closely as a company’s financial health over the long-term usually dictates market outcomes. Specifically, we decided to study Floor & Decor Holdings’ ROE in this article.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

View our latest analysis for Floor & Decor Holdings

How To Calculate Return On Equity?

Return on equity can be calculated by using the formula:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Floor & Decor Holdings is:

17% = US$145m ÷ US$850m (Based on the trailing twelve months to June 2020).

The ‘return’ refers to a company’s earnings over the last year. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.17 in profit.

What Is The Relationship Between ROE And Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or “retains”, and how effectively it does so, we are then able to assess a company’s earnings growth potential. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.

Floor & Decor Holdings’ Earnings Growth And 17% ROE

At first glance, Floor & Decor Holdings seems to have a decent ROE. Further, the company’s ROE is similar to the industry average of 15%. Consequently, this likely laid the ground for the impressive net income growth of 31% seen over the past five years by Floor & Decor Holdings. We reckon that there could also be other factors at play here. For example, it is possible that the company’s management has made some good strategic decisions, or that the company has a low payout ratio.

As a next step, we compared Floor & Decor Holdings’ net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 5.9%.

Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Floor & Decor Holdings fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Floor & Decor Holdings Using Its Retained Earnings

Read more

Optimizing fuel efficiency by reducing the overall weight of vehicle driving the Automotive Interior Materials Market

(MENAFN – GetNews) Automotive Interior Materials Market by Type (Synthetic Leather (PU & PVC), Genuine Leather, Polymers, Fabric), Vehicle Type (Passenger Vehicles, Light Commercial Vehicles, Heavy Commercial Vehicles), Region

The global automotive interior materials market is estimated to be USD 46.63 in 2018 and is projected to grow at a CAGR of 3.5% to reach USD 55.41 billion by 2023. The increasing demand is attributed to the growing automotive industry in emerging regions. Players in this market are adopting various organic and inorganic strategies to expand their presence in emerging markets, such as India, China, Thailand, and Brazil.

Download PDF Brochure to Know More:  [To enable links contact MENAFN]

The introduction of government regulations for vehicle safety, reduction of carbon emission, and lightweight of vehicles is forcing OEMs to provide enhanced safety features in vehicles and use materials that will help in an overall weight reduction of the vehicle. According to EPA, every 100 pounds taken out of the vehicle increases the fuel economy by 12%. This is achieved by making the upholstery flexible and light yet tough to replace with the similar volume of plastic, as plastic components have a higher mass compared to the textile. Thus, replacing plastic with lighter interior materials results in an overall reduction in vehicle weight and at the same time maintaining the safety standards of the vehicle. Hence, manufacturers are encouraged to use automotive interior materials.

Polymers are the most widely used type of automotive interior material

The polymers segment accounts for the largest share of the overall automotive interior material. Automotive interior polymers are used in the manufacture of lightweight and durable interior components. The use of components manufactured with these lightweight polymers helps reduce the overall weight of the vehicle and makes it fuel-efficient.

Passenger vehicles are projected to be the fastest-growing segment in the overall market

The automotive interior materials market in the passenger vehicles segment is projected to witness the highest growth during the period between 2018 and 2023. This vehicle type is also estimated to account for the largest share of the overall interior materials market. This high growth is attributed to the rapidly increasing demand for passenger vehicles. Improving living standards, rising economic conditions, and higher incomes are leading to the increasing demand for passenger vehicles.

APAC is the global leader in the automotive interior materials market. China, India, and Southeast Asian countries are witnessing a significant increase in the use of automotive interior materials for different vehicle types. The production of an automobile is increasing in the region with the growing demand for vehicles. With improving standards of living, the demand for fuel-efficient automobiles is rapidly growing.

The automotive interior materials industry has several global players competing for a share of the market. These companies are actively investing in various strategies, such as expansions, new product developments, mergers & acquisitions, and joint ventures projects, to increase their market shares. Adient plc (Ireland), Toyota Boshoku Corporation (Japan), Lear Corporation (US), Toyoda Gosei Co., Ltd. (Japan), Faurecia S.A.

Read more

Worldwide Home Decor Industry to 2025 – Rapid Urbanization and Population Growth is Driving the Market

The “Home Decor Market – Forecasts from 2020 to 2025” report has been added to ResearchAndMarkets.com’s offering.

The home decor market was valued at US$1,233.550 billion in 2019.

Home decor refers to the art in which the residents aesthetically design the internal and external spaces of residential buildings along with making the fully functional for the use. Various products are included in the category of home decor products such as furniture, kitchen fittings, flooring, and others.

The primary factors supplementing the home decor market growth during the next five year includes the inclination of people towards high-class interior designing of their homes due to high purchasing power, especially across the developed economies of the region. Additionally, the rising consumer preference towards the purchase of eco-friendly products coupled with the growing focus of key players towards the manufacture of products made from various raw materials is also providing an impetus for the market to grow throughout the forecast period.

Furthermore, the rising disposable income across the developing economies such as India, China, and Indonesia has led to an increase in the middle-class population this in turn is leading to an increase in the residential construction across these economies. This, in turn, is also projected to amplify the demand for numerous home decor products such as furniture, flooring, thereby driving the market growth during the next five years. The changing lifestyles have also led to an increased demand for premium quality products is also positively impacting the market growth during the next five years.

Rapid urbanization and population growth is amplifying the market growth

One of the major factors boosting the market growth during the next five years includes the growing population, which is boosting the construction activities across the residential sector, as more housing units are required to meet the housing needs for the growing population. In addition, according to the data from the World Bank Group, the total global population has grown from 6.922 billion from 2010 to 7.593 billion by 2018. In addition, increasing construction activities across various developed economies around the globe is further anticipated to boost the demand for home decor in the coming years.

For instance, the total value of construction including the public and private for the residential sector has increased from USD$366,660 million in 2008 to USD$521,971 in 2019 (Source: US Department of Commerce). Similarly, in the United Kingdom, the value of construction of new work that includes construction in residential and other sectors at current prices continued to rise since 2011 reaching its highest level on record at 109,387 billion in 2017, driven by the growth of the private sector.

Simultaneously, the number of firms operating in the construction industry has also continued to rise in 2017 (Source: Office for National Statistics UK). Also, the rising initiatives by the governments of various developing economies to expand the residential sector is also projected to be a key driving factor for the market to grow in the near future. For example, the Smart Cities Mission

Read more