Highlights

  • Interface shows 52.49% one-year basic EPS growth, a P/E of 14.75 and PEG of 0.56.
  • Second quarter net income was $51.4 million, or $0.88 per diluted share, against $0.55.
  • Interface recognized approximately $15.6 million of IEEPA tariff refunds in second quarter cost of sales.
  • Backlog of unshipped orders was approximately $269.1 million as of July 20, 2026.

An undervalued growth stock pairs earnings growth with its P/E and PEG ratios, and Interface (NASDAQ:TILE) shows all three: basic earnings per share grew 52.49% over one year, the trailing twelve-month P/E ratio is 14.75 and the PEG ratio, on an expected basis, is 0.56, with shares trading at USD 35.83 on October 28, 2026, down 1.86%. In its latest disclosures, the commercial flooring manufacturer redeemed its senior notes in December 2025, recognized approximately $15.6 million of IEEPA tariff refunds in the second quarter, and reported second quarter 2026 net sales of $395.7 million and net income of $51.4 million.

Based in Atlanta, Georgia, and incorporated in Georgia, Interface sells modular carpet, resilient flooring, rubber flooring and other flooring-related material, and also installs carpet and other flooring-related material. Flooring material sales were 98% of total revenue for the six months ended July 5, 2026, and installation was the remaining 2%. The company reports two segments: AMS, which covers customers in the Americas, and EAAA, which covers Europe and Asia-Pacific. In the second quarter, the Americas were 63% of revenue, Europe 27% and Asia-Pacific 10%.

Growth: Second Quarter Earnings, Sales and Segment Results

Net income was $51.4 million, or $0.88 per diluted share, in the second quarter, against $32.6 million, or $0.55. Basic earnings per share were $0.89 against $0.56. For the six months, net income was $75.0 million against $45.6 million, with basic earnings per share of $1.29 against $0.78. The 2026 six-month period included 27 weeks, against 26 weeks a year earlier.

Net sales were $395.7 million, up 5.4% from $375.5 million, which the company attributed primarily to higher customer demand in the corporate office, healthcare and education segments and to higher average sales prices. Operating income was $74.9 million against $52.0 million, and gross profit was 45.0% of net sales against 39.4%, which the company tied to lower manufacturing costs, production efficiencies, product mix and IEEPA tariff refunds.

AMS net sales were $247,666 thousand, up 3.4%, with adjusted operating income up 24.9%. EAAA net sales were $148,032 thousand, up 8.8%, with adjusted operating income up 97.7%.

Valuation: P/E of 14.75, PEG of 0.56 and Cash Flow

The P/E ratio of 14.75 is measured on trailing twelve-month earnings, and the PEG ratio of 0.56 on expected growth. Net cash provided by operating activities was $51,888 thousand for the six months, against $41,867 thousand. Total shareholders' equity was $678,365 thousand at July 5, 2026, against $640,674 thousand at December 28, 2025.

On the August 14 earnings call, Chief Financial Officer Bruce Hausman said the capital allocation strategy prioritizes investment in the business and includes returning excess cash through dividends and share repurchases.

Capital and Balance Sheet: Repurchases, Dividends and Credit Facility

Interface repurchased 771,125 shares at a weighted average price of $26.90 in the six months under its $100 million program, adopted in May 2022 with no specific expiration date. Approximately $43,912,724 remained available under the program at July 5, 2026. Dividends paid were $3,621 thousand against $1,227 thousand, and the company declared cash dividends of $0.03 per common share in each of the first two quarters.

Cash was $81.5 million at July 5, 2026. Borrowings under the credit facility were $171.1 million of term loan and $33.1 million of revolving loans, with additional borrowing capacity of $216.3 million. Total debt was $204,536 thousand against $181,779 thousand at December 28, 2025.

Disclosed Risks and Outlook: Raw Material Costs, Tariffs and Guidance

Selling, general and administrative expenses were $103,166 thousand against $95,930 thousand, up 7.5%. The company recognized other tariff costs of $3.5 million in the second quarter and cited inflation, supply chain disruptions, energy markets and financial pressures in the commercial office market as possible adverse influences. It said backlog fluctuates with the timing of large projects, and backlog was approximately $222.8 million as of February 2, 2026.

The 10-Q states that Interface anticipates third quarter revenue growth and expects higher raw material, energy and luxury vinyl tile procurement costs for the rest of fiscal 2026, which it is addressing through incremental pricing and productivity.

On the call, management said it raised full year guidance and assumes no additional tariff refunds. For the third quarter of fiscal 2026 it anticipates net sales of $370 million to $380 million and adjusted gross profit margin of approximately 40.8%. For fiscal 2026, a 53-week year, it anticipates net sales of $1.455 billion to $1.485 billion, adjusted gross profit margin of approximately 40.6% and capital expenditures of approximately $60 million.