What Foot Locker (FL) Investors Need to Know Today

Now trading at a price of $27.11, Foot Locker has moved -1.9% so far today.

Foot Locker returned losses of -8.2% last year, with its stock price reaching a high of $47.22 and a low of $23.85. Over the same period, the stock underperformed the S&P 500 index by -15.0%. As of April 2023, the company's 50-day average price was $40.04. 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 5.8% dividend yield over the last 12 months.

Wider Gross Margins Than the Industry Average of 23.25%:

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 $2.63
EPS Growth n/a -31.56% 179.55% -69.45%
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

Foot Locker benefits from stable revenues and increasing reinvestment in the business, strong margins with a stable trend, and low leverage. The company's financial statements show wider gross margins than its peer group and generally positive cash flows. However, the firm has declining EPS growth. Finally, we note that Foot Locker has a decent current ratio.

Foot Locker Has Attractive Multiples and Trades Below Its Graham Number:

Foot Locker has a trailing twelve month P/E ratio of 15.2, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $3.24, the company has a forward P/E ratio of 12.4. The -6.4% compound average growth rate of Foot Locker's historical and projected earnings per share yields a PEG ratio of -2.39. 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 0.79 while the sector average is 3.12. The company's shares are currently trading -55.1% below their Graham number.

Foot Locker Has an Average Rating of Hold:

The 18 analysts following Foot Locker have set target prices ranging from $25.0 to $50.0 per share, for an average of $35.67 with a hold rating. As of April 2023, the company is trading 12.3% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Foot Locker has an unusually large proportion of its shares sold short because 18.5% 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 $310,912,966.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.