Foot Locker, Inc. ($FL) Earnings (Q2 FY22)

 Foot Locker, Inc. ($FL) Earnings and Opinion:


Foot Locker is a company in the Consumer Cyclical sector and operates in the Apparel Retail industry. The company operates as an athletic footwear and apparel retailer. Foot Locker was founded in 1879 and is currently headquartered in New York, New York. The company made its debut on the stock market in 1985.

Foot Locker Earnings Result:

  • Revenues of $2.07B missing expectations of $2.08B
  • Gross Profit of $654M beating expectations of $608M
  • Operating Income of $139M beating expectations of $115M
  • Adjusted EPS of $1.10 beating expectations of $0.80
  • Inventories of 1.6B beating expectations of $1.2B
  • Guidance for Revenue and EPS missed consensus estimates
  • Gross Profit guidance beat consensus estimates
Opinion:
Foot Locker is currently trading over 20% higher, as they reported earnings before the market opened this morning. The company missed expectations on revenue, but were able to have solid beats on all the other metrics. The margins also had solid beats, which is a good sign for the company. Inventories were also higher, which can be viewed as a good thing, as they have more product to sell. A big CEO in Mary Dillon was announced as the CEO, which investors in this company are happy to hear this. It seems the company has a pretty solid supplier relationship going on with Nike right now, which is usually frowned upon. I think estimates were overlooked by investors, but the guidance was a very slim miss. As far as valuation goes, the P/E ratio in Q1 was 4.0 which is way below the industry average of 25. The P/S ratio was 0.35 which is also below the industry average of 0.89. The current ratio is at 1.44 which is a good level. The debt outweighs the cash, but this is okay for a profitable company, as they shouldn't have much of a problem taking care of long-term obligations. The thing that is bad is the growth. With negative growth anticipated in some of the years to come, this could hold back the company and cause fluctuations. In my opinion, although Foot Locker is undervalued at the moment, I would hold off. The dividend is definitely appealing too, but I think the history of the stock speaks for itself. It has been a very volatile run for Foot Locker. There is potential for upside, but that comes with a lot of risk. I would hold off on this bet and look other places to invest.


*Information from CMLVIZ, Yahoo Finance, Consensus Gurus, CSI Market

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