Foot Locker returned gains of 41.0% last year, with its stock price reaching a high of $47.22 and a low of $23.85. Over the same period, the stock outperformed the S&P 500 index by 41.0%. More recently, the company's 50-day average price was $41.56. Foot Locker, Inc., through its subsidiaries, operates as a footwear and apparel retailer in North America, Europe, Australia, New Zealand, Asia, and the Middle East. Based in New York, NY, the mid-cap Consumer Discretionary company has 15,200 full time employees. Foot Locker has offered a 3.8% dividend yield over the last 12 months.
Stable Revenues With Increasing Reinvestment in the Business:
| 2020-01-31 | 2021-01-31 | 2022-01-31 | 2023-01-31 | |
|---|---|---|---|---|
| Revenue (MM) | $8,005 | $7,548 | $8,958 | $8,759 |
| Gross Margins | 31.8% | 28.9% | 34.4% | 32.0% |
| Operating Margins | 8.9% | 5.6% | 11.5% | 7.9% |
| Net Margins | 6.22% | 4.28% | 9.97% | 3.9% |
| Net Income(MM) | $498 | $323 | $893 | $342 |
| Interest Cost | $11,000 | -$7,000 | -$14,000 | -$15,000 |
| Depreciation & Amort. | -$179,000 | -$176,000 | -$197,000 | -$208,000 |
| Earnings Per Share | $4.5 | $3.08 | $8.61 | $3.62 |
| EPS Growth | n/a | -31.56% | 179.55% | -57.96% |
| Diluted Shares (MM) | 109 | 105 | 104 | 93 |
| Free Cash Flow (MM) | $509 | $903 | $457 | -$112 |
| Capital Expenditures (MM) | -$187 | -$159 | -$209 | -$285 |
| Net Current Assets (MM) | -$1,733 | -$1,432 | -$2,517 | -$2,093 |
| Current Ratio | 2.0 | 1.73 | 1.36 | 1.57 |
| Long Term Debt | $122,000 | $8,000 | $451,000 | $446,000 |
| Net Debt / EBITDA | -0.31 | -1.46 | 0.15 | 0.62 |
The Market May Be Undervaluing Foot Locker's Assets and Equity:
Foot Locker has a trailing twelve month P/E ratio of 11.5, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $4.16, the company has a forward P/E ratio of 10.0. The -1.6% compound average growth rate of Foot Locker's historical and projected earnings per share yields a PEG ratio of -7.37. This indicates that its shares are overvalued.In contrast, the market is likely undervaluing Foot Locker in terms of its equity because its P/B ratio is 1.19 while the sector average is 3.12. The company's shares are currently trading -33.0% below their Graham number.
Analysts Give Foot Locker an Average Rating of Hold:
The 18 analysts following Foot Locker have set target prices ranging from $30.0 to $60.0 per share, for an average of $44.0 with a hold rating. As of April 2023, the company is trading -5.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Foot Locker has an unusually large proportion of its shares sold short because 19.7% of the company's shares are sold short. Institutions own 101.4% of the company's shares, and the insider ownership rate stands at 1.66%, suggesting a small amount of insider investors. The largest shareholder is Vesa Equity Investment S.a R.l., whose 12% stake in the company is worth $481,565,315.
