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With NBA Finals Over, Checking In With Stars' Most Visible Brands

Jayson Derrick

The Golden State Warriors completed a nearly perfect sweep of the NBA playoffs by defeating the defending champions Cleveland Cavaliers in Game 5 of the NBA Finals.

The Warriors' perfect 12–0 run heading into the Finals could in part be attributed to Under Armour Inc (NYSE: UAA)'s recent gains as one of the company's most notable brand ambassador, Steph Curry, was on track to cruise to a championship.

Impact On Foot Locker

Nike Inc (NYSE: NKE)'s Kevin Durant took home the Most Valuable Player trophy, which may bode well for sales of Nike's KD 9 and other Durant branded shoes. As such, the question fresh on many investors' minds is what is the outlook for the most visible basketball shoe seller, Foot Locker, Inc. (NYSE: FL)?

Argus' John Staszak isn't bullish on Foot Locker's outlook and even downgrades the stock's rating from Buy to Hold based on expectations of a slowdown in comp sales and earnings per share.


Foot Locker's guidance calls for a mid-single-digit comp growth in the back half of fiscal 2018. The company is optimistic it can achieve its guidance based on strong sales of Nike's products but the fact is sales of Nike footwear have softened as of late after a strong five-year run.

Foot Locker is now projected to see a revenue growth of 4 percent to $8.1 billion for the full year, Staszak stated. But this represents a slowdown from the 4.8 percent growth in fiscal 2017 and represents a decrease from the analyst's prior estimate of $8.4 billion.

The analyst is also projecting a 40-basis point decline in operating margins from 13 percent in fiscal 2017 to 12.6 percent in fiscal 2018.

Finally, Foot Locker's stock is trading at 10.8x the analyst's fiscal 2018 earnings per share which is below the industry average of 15.1x and this is justified based on the prospects for weaker near-term comps and margin declines.

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Image Credit: By Dwight Burdette (Own work) [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

Latest Ratings for FL

Date Firm Action From To
Jun 2017 Argus Downgrades Buy Hold
Jun 2017 Standpoint Research Initiates Coverage On Buy
Feb 2017 Guggenheim Upgrades Neutral Buy

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