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Foot Locker (FL) Scores High on 3 Grounds: Time to Buy

Is Foot Locker, Inc.FL part of your portfolio? If not, then this is the right time to add the stock as it looks very promising. Moreover, the underlying factors are capable of carrying the momentum further. The stock sports a Zacks Rank #1 (Strong Buy) and has a long-term earnings growth rate of 11.5%, which highlight its inherent strength. We believe that Foot Locker offers a sound investment opportunity. Hence, we have tried to assess the stock on three basic parameters. Let's delve deeper.

From Earnings Perspective

The stock appears compelling from the earnings perspective, as it continued with its positive earnings surprise streak for the fourth straight quarter. In the trailing four quarters, Foot Locker outperformed the Zacks Consensus Estimate by an average of 11.3%, including a positive surprise of 21.7% registered in the last concluded quarter.

Solid comparable-store sales growth and cost-containment efforts helped the company to post better-than-expected second-quarter fiscal 2015 results, wherein its earnings of 84 cents a share surpassed the Zacks Consensus Estimate of 69 cents and surged 31.3% from the prior-year quarter figure of 64 cents. Total sales also increased 3.3% year over year to $1,695 million and outpaced the Zacks Consensus Estimate of $1,664 million.

From Estimate Revisions Perspective

Following Foot Locker's sturdy performance and encouraging outlook, the Zacks Consensus Estimate witnessed an uptrend as analysts raised their estimates. Management now projects a mid single-digit increase in sales in the third quarter as well as in the second half of the fiscal year. Based on the current sales trend, Foot Locker now expects to attain double-digit growth in earnings per share in the third and fourth quarters.

Analysts polled by Zacks are convinced about the stock's upbeat performance. Over the past 60 days, the Zacks Consensus Estimate of $4.24 and $4.71 per share for fiscal 2015 and fiscal 2016 has jumped 5.5% and 5.1%, respectively. Clearly, a positive sentiment is palpable among analysts covering the stock.

From the Viewpoint of Fundamentals

Foot Locker's stellar performance is backed by effective implementation of its operational and financial initiatives. Management believes that by continually exploiting opportunities like children's business, shop-in-shop expansion in collaboration with its vendors, store banner.com business, store refurbishment and enhancement of assortments, the company can benefit in the long run. International expansion, especially in Europe, is another growth catalyst. The company is also developing its E-commerce platform.

Share price of this retailer of athletic shoes and apparel is hovering close to its 52-week high of $77.25 attained on Sep 25, 2015, and has surged roughly 28% year to date.

Other Stocks to Consider

Investors interested in the retail space may also consider other well-ranked stocks such as Citi Trends, Inc. CTRN , sporting a Zacks Rank #1, American Eagle Outfitters, Inc. AEO and Guess' Inc. GES , both carrying a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMER EAGLE OUTF (AEO): Free Stock Analysis Report

FOOT LOCKER INC (FL): Free Stock Analysis Report

CITI TRENDS INC (CTRN): Free Stock Analysis Report

GUESS INC (GES): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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