Companies To Watch In 2016: The Tile Shop
Which Minnesota companies should you keep your eye on in 2016? TCB talked to five analysts who provided their insights. Over the next few weeks, we’ll share with you what we heard.
With the state of today’s housing market, Plymouth-based wall and flooring retailer The Tile Shop (TTS) is in the sweet spot.
Peter Keith, a principal and senior research analyst at Minneapolis-based Piper Jaffray, believes “the industry backdrop for home remodeling is quite strong” at the moment. In part, “rising home prices are giving homeowners confidence in making upgrades to their homes.”
The Tile Shop, which offers free shipping and installation walkthroughs on its materials for bathrooms, kitchens and outdoors, realized sharp growth in store performance. In 2013 and 2014, the tiling retailer opened 39 new locations across the country, which Keith notes are performing well and should continue to do so through 2016.
“In 2016,” Keith said, “Tile Shop can grow revenue by 10 percent to 15 percent and, with margin expansion, we believe earnings can grow 30 percent to 50 percent.”
Fragmentation within the tile industry will likely play to The Tile Shop’s advantage, he said, referencing competition between independent and regional operators. “Big-box home improvement stores such as Home Depot and Lowe’s sell tile, but are not able to offer the selection, service, and delivery times that Tile Shop can provide.”
With 115 stores in operation, Keith believes that number could increase to 300-400 stores in the U.S. over time.
In 2015, stock for The Tile Shop increased more than 100 percent in value (from $7.46 in January to $16 today).