Floor & Decor Holdings Inc-A scores 48 for management and 51 for moat. The management score rests on a return on invested capital of 4.7% and a gross margin of 43.6% — figures that describe returns closer to the cost of the capital behind them. Debt sits at 1.51x equity.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 14.1% a year, the rate measured from the filings. The exit multiple assumed is 28.1x. That produces an intrinsic value of $55.74, a 10-CAP price of $27.70 and a payback time price of $41.91, with the value zone set at the highest of the three, $41.91. Today's price of $46.03 sits 10% above it.
The price is above the value zone and the business scores 51 for moat and 48 for management. Neither test argues for paying up here.
| Price | $46.03 |
| Market cap | $4.9B |
| P/E ratio | 21.4x |
| Return on invested capital | 4.7% |
| Gross margin | 43.6% |
| Debt to equity | 1.51x |
| Free cash flow yield | 0.9% |
| Growth rate used | 14.1% |
| Growth rate measured | 14.0% |
| Exit multiple assumed | 28.1x |
| Company | Moat | Buy price |
| Garrett Motion Inc (GTX) | 26 | $20.36 |
| Acushnet Holdings (GOLF) | 46 | $43.38 |
| Vail Resorts Inc (MTN) | 11 | $123.82 |
| Gentex Corp (GNTX) | 66 | $29.05 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Floor & Decor Holdings Inc-A rather than accepting ours.