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Can Foot Locker's Strategic Efforts Retain Growth Trend?

Zacks Equity Research

Appealing stocks are those which continue with their momentum and remain investors’ favorite. Foot Locker, Inc. FL is one such stock that looks quite promising on the back of its strong brand recognition, sturdy fundamentals and strategic initiatives.

Foot Locker has exhibited a bullish run in the index. So far in 2016, this Zacks Rank #2 (Buy) stock has increased roughly 17% compared with the Zacks categorized Retail–Apparel/Shoe industry that has declined 5.6%. Yesterday, the stock hit a 52-week high of $76.06 and we believe there still much momentum left in the stock, which is quite evident from its VGM Score of “A” and long-term earnings growth rate of 9.9%.

Growth Catalysts

Foot Locker is one of the most widely recognized names in the athletic footwear and apparel industry. The company boasts a solid portfolio of leading brands under a variety of store banners, which helps it to target specific markets and effectively meet consumer demand. We believe that continuous exploitation of opportunities, such as children’s business, shop-in-shop expansion, store refurbishment and enhancement of assortments, are likely to benefit the company, going forward.

Expanding its global footprint, particularly in Europe, also constitutes as a growth catalyst. Further, Foot Locker is focused on improving its eCommerce platform, growing direct-to-consumer business, margin expansion and tapping underpenetrated markets.

The strategic endeavors have aided Foot Locker to post positive earnings surprise for the second straight quarter, as it reported third-quarter fiscal 2016 results. In addition, both earnings and revenues increased year over year. Results were backed by sturdy comparable-store sales performance, cost containment efforts and effective implementation of its operational and financial initiatives. (Read more: Foot Locker Posts Positive Q3 Earnings Surprise)

Consequently, management reaffirmed its projection of a mid-single-digit increase in comps in fiscal 2016. Further, it continues to expect double-digit growth in earnings per share for fiscal 2016.

FOOT LOCKER INC Price and Consensus

FOOT LOCKER INC Price and Consensus | FOOT LOCKER INC Quote

Stocks to Consider

Other favorably placed stocks in the retail space include Best Buy Co., Inc. BBY, The Children's Place, Inc. PLCE and Tilly’s Inc. TLYS, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Best Buy, with a long-term earnings growth rate of 11.9%, has jumped 53.8% year to date.

The Children's Place, with a long-term earnings growth rate of 10.3%, has gained roughly 91.8% year to date.

Tilly’s, with a long-term earnings growth rate of 15.5%, has surged a whopping 125.2% in the past six months.

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FOOT LOCKER INC (FL): Free Stock Analysis Report
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