On Friday, athletic retail giant Foot Locker, Inc. (FL) reported stellar third-quarter earnings that surpassed analysts’ estimates. Now that investors have had a chance to digest these results, is now the time to buy FL?
Foot Locker – Company Profile
Foot Locker operates as both a retailer of footwear and apparel in more than 20 countries worldwide, with 3,474 stores and counting. Foot Locker brings its customers the leading brands in athletic gear and apparel and has various segments targeted toward specific demographics, including Lady Foot Locker, Kids Foot Locker, Champs Sports, Footaction and CCS, a skater-themed store geared toward 12 to 18 year olds.
Foot Locker – Earnings Rundown
Compared with last year, Foot Locker’s third-quarter profit jumped 15% to $120 million. Adjusted earnings for the quarter were 83 cents per share, representing an 18% increase from last year. Foot Locker beat the consensus estimate of 79 cents per share by 4.8%. Sales increased by 6.7% to $1.73 billion, also topping the $1.72 billion consensus estimate by a hair.
Comparable-store sales, a measure of performance at Foot Locker stores open a year or longer, rose 6.9% year over year. All in all, Foot Locker had a great report, and the analyst community lifted the consensus fiscal 2015 earnings estimate following these strong results.
Foot Locker – Current Ratings
For the past 12 months, Foot Locker has been on the rebound. As recently as last November, FL was a “D-rated sell.” FL receives an “A” for its Quantitative Grade and a “B” for its Fundamental Grade.
Breaking down Foot Locker’s fundamentals, Foot Locker earns “Bs” in four out of eight metrics: Sales growth, operating margin growth, earnings growth and cash flow. Foot Locker could improve in earnings momentum and earnings surprises, earning “Cs” for both metrics. Foot Locker excels in return on equity, with an “A.” Foot Locker earns a “B” for its overall Fundamental Grade.
As of this posting, Nov. 25, I consider FL an “A-rated strong buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
