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Here's Why Foot Locker (FL) Appears a Lucrative Option Now

Zacks Equity Research

It seems that Foot Locker, Inc. FL has been doing well for quite some time now. Shares of this Zacks Rank #2 (Buy) company have outpaced the Zacks categorized Retail – Apparel/Shoe industry and the broader sector in the past one year. The stock rose 16.9%, compared with the industry’s decline of 28.4%. On the contrary, the Zacks categorized Retail-Wholesale sector returned 7.1%.

Additionally, the stock boasts a VGM Score of “A”, with a long-term earnings growth rate of 9.7%, highlighting its growth potential.

Let’s Delve Deep

Armed with a strong portfolio of leading brands, Foot Locker is among the widely recognized names in the athletic footwear and apparel industry. In fact, it is gaining from the effective implementation of its operational and financial initiatives. We believe that continuous exploitation of opportunities such as children’s business, shop-in-shop expansion, store banner.com business, store refurbishment and enhancement of assortments, will benefit the company in the long run.

Alongside, management is focusing on augmenting its eCommerce platform, growing direct-to-consumer operations, margin expansion and tapping underpenetrated markets. Also, the company is concentrating on enhancing shareholder value and sustaining robust level of investment to achieve long-term goal, which is quite evident from the three capital allocation initiatives announced in Feb 2017.

We note that sturdy comparable sales performance, cost containment efforts and strategic initiatives have helped the company to post third straight quarter of positive earnings surprise in fourth-quarter fiscal 2016 results. In addition, it registered year-over-year growth in both the top and bottom lines. In fact, management also envisions double-digit growth in earnings per share for the fiscal 2017.

Consequently, the Zacks Consensus Estimate of $5.39 and $5.85 for fiscal 2017 and fiscal 2018 has increased 13 cents and 4 cents, respectively, over the last 60 days.

However, a competitive retail landscape, fashion obsolescence and foreign currency headwinds remain concerns for the company.

Other Stocks You May Consider

Other favorably-placed stocks worth considering in the Retail-Wholesale space include The Children's Place, Inc. PLCE, Kate Spade & Company KATE and Big 5 Sporting Goods Corporation BGFV.

The Children's Place, with a long-term earnings growth rate of 8% has surged 52.3% in the past six months. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kate Spade, a Zacks Rank #1 stock rose 34.3% in the past six months.  Also, it has a long-term earnings growth rate of 28.3%.

Big 5 Sporting, which carries a Zacks Rank #2 has jumped 38.2 in the past one year. Also, the stock has a long-term earnings growth rate of 12%.

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Foot Locker, Inc. (FL): Free Stock Analysis Report
Children's Place, Inc. (The) (PLCE): Free Stock Analysis Report
Kate Spade & Company (KATE): Free Stock Analysis Report
Big 5 Sporting Goods Corporation (BGFV): Free Stock Analysis Report
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