Foot Locker may be undervalued with strong growth indicators, but the 18 analysts following the company give it an average rating of hold. Their target prices range from $30.0 to $60.0 per share, for an average of $43.94. At today's price of $30.18, Foot Locker is trading -31.33% away from its average target price, suggesting there is an analyst consensus of strong upside potential for the stock.
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 provided a 3.9% dividend yield over the last 12 months.
Foot Locker has a trailing twelve month P/E ratio of 8.5, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of 4.15, the company has a forward P/E ratio of 7.3.
The average compound growth rate of the company's historical and projected earnings per share is -1.6%. On this basis, the company's PEG ratio is -7.14, which indicates that its shares are overpriced.
On the other hand, the market is potentially undervaluing Foot Locker in terms of its book value because its P/B ratio is 0.86. In comparison, the sector average P/B ratio is 3.12. The company's shares are currently -51.7% below their Graham number, indicating that its shares have a margin of safety.
So why are analysts giving FL a bad rating? We believe analysts could be alarmed by the company's disappointing -37.5% rate of cash flow growth over the last 4 years. Foot Locker's poor EPS growth rate of -5.8% is another drawback that analysts are focusing on.
| 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 |
| Net Interest Income | $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 | $3.54 |
| EPS Growth | n/a | -31.56% | 179.55% | -58.89% |
| 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 (MM) | $122 | $8 | $451 | $446 |
| Net Debt / EBITDA | -0.31 | -1.46 | 0.15 | 0.62 |
