3 Reasons to Buy Floor & Decor Stock Like There's No Tomorrow

Jon Quast, The Motley Fool

Sun, Jun 8, 2025, 12:14 PM 5 min read

• Floor & Decor's business model earned praise from an all-time great investor, and it has large expansion plans.

• The stock's valuation is more attractive than usual and it's unlikely to get much cheaper tomorrow.

• 10 stocks we like better than Floor & Decor ›

In 2017, home improvement retail chain Floor & Decor Holdings (NYSE: FND) went public. It only had about 70 locations and was still virtually unknown. And investors could have bought it at any time during the past eight years. But now it's time to buy Floor & Decor stock like there's no tomorrow.

Of course, that's just an expression -- there will be a tomorrow for Floor & Decor, and I believe it will be great for shareholders. That's why I believe it's worth the investment today. But when it comes to buying the stock at an attractive price, I don't think that investors should necessarily wait until tomorrow, hoping for any entry point that's better than this.

The valuation is my third reason to buy Floor & Decor stock today. But first allow me to explain two other reasons why it's a good buy right now.

Before he passed away in 2023, Charlie Munger was renowned for being a great investor and one who was focused on business fundamentals. Therefore, when he praises a business model, it's a big deal. And in one of his final interviews, Munger praised Floor & Decor.

There are two extremes in retail. One approach is to have a lot of little stores -- GameStop fits in this category. It ended 2024 with over 3,200 locations, which is massive. But each location only had just over $1 million in annual sales.

The other approach is to have relatively few stores that handle massive volume, which is Floor & Decor's business model and what Munger loved about it. It follows the same logic as one of his favorite businesses, Costco Wholesale.

Floor & Decor only has around 250 locations today and it only expects to have around 500 long term. But each is between 50,000 square feet and 80,000 square feet. And with $4.5 billion in overall trailing-12-month revenue, these 250 stores are certainly high volume.

High-volume stores can serve Floor & Decor by creating operating leverage, leading to strong profitability. It's something to watch as the business grows.

As mentioned, Floor & Decor is looking to grow to at least 500 locations in coming years. Here in 2025, it's looking to open 20 new stores, which is about 8% growth. But keep in mind that this growth is slow by this company's standards. Given the economic uncertainty right now, management pulled back on this year's plans.