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Foot Locker's (FL) Q1 Earnings Likely to Increase: Here's Why

Zacks Equity Research

Foot Locker, Inc. FL is scheduled to release first-quarter fiscal 2019 results on May 24. Investors are pinning hopes on this retailer of athletic shoes and apparel to continue with its positive earnings surprise streak. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by average of 9.7%. The company’s bottom line outperformed the Zacks Consensus Estimate by 12.2% in the last reported quarter.

How Are Estimates Faring?

The Zacks Consensus Estimate for the to-be-reported quarter is pegged at $1.61, suggesting an improvement of roughly 11% from the year-ago quarter. We note that the Zacks Consensus Estimate has fallen by a penny in the past 30 days. The Zacks Consensus Estimate for revenues currently stands at $2,106 million, indicating growth of approximately 4% from the year-ago quarter. In the last reported quarter, the company’s total sales grew 2.8%.

Factors at Play

Foot Locker is trying to improve performance through operational and financial initiatives. A clear reflection of the same is visible from abovementioned consensus estimates for sales and earnings that indicate year-over-year growth.

Management is focusing on development of supply chain, improvement of mobile and web platforms, and expansion of data analytics capabilities. The company is also focusing on augmenting direct-to-consumer operations, margin expansion, tapping underpenetrated markets and testing new retail concept, Power Stores. The company’s efforts to revamp and remodel stores are yielding results.

The aforementioned factors are most likely to influence the company’s performance in the to-be-reported quarter. Management had earlier guided mid-single digit increase in comparable-store sales in each quarter during fiscal 2019.

In spite of these tailwinds, higher SG&A expenses remain a concern. We note that SG&A expense rate increased 70 basis points to 19.9% during the fourth quarter of fiscal 2018 on account of sustained investments in augmenting digital capabilities, wage pressure and higher incentive compensation expense.

Foot Locker, Inc. Price, Consensus and EPS Surprise
 

Foot Locker, Inc. Price, Consensus and EPS Surprise

Foot Locker, Inc. price-consensus-eps-surprise-chart | Foot Locker, Inc. Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that Foot Locker is likely to beat estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP 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 has a Zacks Rank #3 but an Earnings ESP of -3.73%. This 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 earnings beat.

Abercrombie & Fitch ANF has an Earnings ESP of +1.78% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco COST has an Earnings ESP of +2.10% and a Zacks Rank #3.

Deckers DECK has an Earnings ESP of +53.19% and a Zacks Rank #3.

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Foot Locker, Inc. (FL) : Free Stock Analysis Report
 
Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
 
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