Critical Survey: Floor & Decor (NYSE:FND) and Home Depot (NYSE:HD)

Home Depot (NYSE:HD) and Floor & Decor (NYSE:FND) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, analyst recommendations, profitability, institutional ownership, risk, dividends and earnings.

Risk and Volatility

Home Depot has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, Floor & Decor has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500.

Insider & Institutional Ownership

70.9% of Home Depot shares are held by institutional investors. 0.1% of Home Depot shares are held by insiders. Comparatively, 1.8% of Floor & Decor shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Home Depot and Floor & Decor”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Depot	$169.18 billion	2.03	$14.16 billion	$14.29	24.04
Floor & Decor	$4.75 billion	1.15	$208.65 million	$2.23	22.98

Home Depot has higher revenue and earnings than Floor & Decor. Floor & Decor is trading at a lower price-to-earnings ratio than Home Depot, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Home Depot and Floor & Decor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Depot	8.41%	106.42%	13.76%
Floor & Decor	5.05%	8.40%	3.68%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Home Depot and Floor & Decor, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Depot	1	13	18	1	2.58
Floor & Decor	5	12	4	0	1.95

Home Depot currently has a consensus price target of $375.31, suggesting a potential upside of 9.27%. Floor & Decor has a consensus price target of $54.70, suggesting a potential upside of 6.74%. Given Home Depot’s stronger consensus rating and higher probable upside, equities analysts plainly believe Home Depot is more favorable than Floor & Decor.

Summary

Home Depot beats Floor & Decor on 13 of the 15 factors compared between the two stocks.

About Home Depot

The Home Depot, Inc. operates as a home improvement retailer in the United States and internationally. It sells various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products. The company also offers installation services for flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners; and professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, and building service contractors, as well as specialty tradesmen, such as electricians, plumbers, and painters. It sells its products through websites, including homedepot.com; homedepot.ca and homedepot.com.mx; blinds.com, justblinds.com, and americanblinds.com for custom window coverings; thecompanystore.com, an online site for textiles and décor products; hdsupply.com for maintenance, repair, and operations (MRO) products and related services; and The Home Depot stores. The Home Depot, Inc. was incorporated in 1978 and is headquartered in Atlanta, Georgia.

About Floor & Decor

Floor & Decor Holdings, Inc. engages in the retail of hard surface flooring and related accessories. It provides wood, stone, and flooring products. Its products include vinyl, laminate, and tiles with materials installation for living rooms, kitchen, bathrooms, and walls. The company was founded by George Vincent West in 2000 and is headquartered in Atlanta, GA.