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Foot Locker (FL) to Post Q1 Earnings: What's in the Cards?

Zacks Equity Research

Foot Locker, Inc. FL is slated to release first-quarter fiscal 2017 results on May 19. The question lingering in investors’ minds is whether this retailer of athletic shoes and apparel will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 2.2%. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The current Zacks Consensus Estimate for the quarter under review is $1.38 a penny down from $1.39 reported in the year-ago period. We noted that the Zacks Consensus Estimate has decreased by 9 cents in the past 30 days. Analysts polled by Zacks expect revenues of $2,025 million, up about 2% from the year-ago quarter.

Foot Locker forms part of the Retail-Wholesale sector. Per the latest Earnings Preview report as of May 12, Retail-Wholesale sector is likely to witness earnings decline of 1.7% but revenue growth of 3.3%.

Factors at Play

Foot Locker’s stellar performance is backed by effective implementation of operational and financial initiatives. We believe that the company is likely to gain by constantly utilizing opportunities like kids’ and women’s business, shop-in-shop expansion in collaboration with its vendors, store banner.com business, store refurbishment and enhancement of assortments. Further, the company is focusing on augmenting eCommerce platform, growing direct-to-consumer operations, margin expansion and tapping underpenetrated markets.

However, a competitive retail landscape, fashion obsolescence and foreign currency headwinds remain concerns. Moreover, sluggish start to fiscal 2017 on account of delay in the issuance of income tax refund compelled Foot Locker to revisit its outlook. The company now envisions earnings in the first quarter to be equivalent to or marginally below last year's earnings or in the range of $1.36–$1.39 per share. Management expects comparable store sales to increase at a low-single digit percentage rate in the quarter.

Foot Locker, Inc. Price, Consensus and EPS Surprise

 

Foot Locker, Inc. Price, Consensus and EPS Surprise | Foot Locker, Inc. Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that Foot Locker is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Foot Locker carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.38. The combination of Foot Locker’s Zacks Rank #3 and a 0.00% ESP makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Best Buy Co., Inc. BBY has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Children's Place, Inc. PLCE has an Earnings ESP of +1.82% and a Zacks Rank #2.

Lowe's Companies, Inc. LOW has an Earnings ESP of +1.87% and a Zacks Rank #3.

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Lowe's Companies, Inc. (LOW): Free Stock Analysis Report
 
Foot Locker, Inc. (FL): Free Stock Analysis Report
 
Children's Place, Inc. (The) (PLCE): Free Stock Analysis Report
 
Best Buy Co., Inc. (BBY): Free Stock Analysis Report
 
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