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Thursday, March 05, 2015
Connor Campbell - Market Analyst at Spreadex

Stock of the day 05/03/2015 – Foot Locker Inc

After a flat 2013, Foot Locker saw an upswing in 2014 that only began to plateau in the final few months of the year. It started last year at $41.36, swiftly hitting its 2014 low at the start of February when it crashed to $36.73. However, this was to be an anomaly for Foot Locker, and a string of positive releases led to near constant gains, culminating in its 2014, and all-time, high of $58 in mid-September. From that point onwards the stock traded between $52 and $58, opening 2015 at roughly its average fourth quarter price of $56.40. Ahead of its Q4 release on Friday, the stock is now trading at $57.46, just below its record close.

Foot Locker Inc Chart March 2015

Sales figure releases for November and December suggest a strong demand for clothing and shoes over the holidays, complete with the added upshot of little promotional or clearance budget eating into the gains. On top of this comes Foot Locker’s positive recent performance, which saw a third quarter earnings per share of $0.83, a 22% gain on the previous quarter, alongside a 6.8% year-on-year growth in revenue to $1.73 billion, both of which were higher than the analyst consensus.

What could throw a spanner in the works is the now classic problem of the strength of the US dollar; a curse for many multinational corporations this earnings season, Foot Locker has already claimed that this issue could cost its EPS a few cents in the fourth quarter, especially due to the company’s increased presence in Europe. Things could be further exacerbated by the West Coast port disputes, which saw strikes by dockworkers cause huge cargo backups, the extent of which will likely not be revealed until the release on Friday.

However, for all this potentially disastrous news, analysts remain bullish on the stock. The current consensus is for an 11% gain in earnings per share to $0.91 and a 4.7% revenue growth to $1.875 billion. The only issue with these forecasts is that it reflected a slowdown on the rapid third quarter growth Foot Locker saw, a fact that may not be welcome news to investors. Regardless, analysts have an average rating of ‘buy’ and a 12 month target price of $56.84.

Recent Posts:
Morning Market Comment 05/03/2015
Evening Market Comment 04/03/2015
UK General Election preview 04/03/2015
Afternoon Market Comment 04/03/2015
Stock of the day 04/03/2015 - Costco Wholesale Corp


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