Foot Locker, Inc. (NYSE:FL) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of FL, it is a financially-healthy company with a strong track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Foot Locker here.
6 star dividend payer with excellent balance sheet
FL delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. This illustrates a strong track record, leading to a satisfying return on equity of 21%, which is what investors like to see! FL is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that FL manages its cash and cost levels well, which is a key determinant of the company’s health. FL seems to have put its debt to good use, generating operating cash levels of 5.56x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
FL's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if FL's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the specialty retail industry, FL is also trading below its peers, relative to earnings generated. This bolsters the proposition that FL's price is currently discounted.
For Foot Locker, I've put together three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for FL’s future growth? Take a look at our free research report of analyst consensus for FL’s outlook.
- Dividend Income vs Capital Gains: Does FL return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from FL as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FL? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.