Foot Locker Looks Promising - Analyst Blog

It seems Foot Locker, Inc. FL is well set on the growth trajectory, given the momentum the stock has garnered, positive earnings surprise history, and strong fundamentals. So far in the year, shares of this athletic footwear and apparel retailer, has surged nearly 13% backed by its impressive financials and solid quarterly results.

Driven by significant initiatives undertaken towards achieving its long-term goals, the company recently posted record fourth-quarter and fiscal 2013 results where its quarterly adjusted earnings of 82 cents soared 28% year over year, substantially ahead of the Zacks Consensus Estimate of 75 cents. For the full year, the company's earnings witnessed a double-digit rise for the fourth time in a row.

On an average, this Zacks Rank #2 (Buy) stock has delivered a positive earnings surprise of 21.6% over the past 14 quarters, making investors constructive on the stock's performance. Providing further impetus to the stock is its sales performance for the quarter that escalated 4.6% year over year to $1,791 million, benefiting from a 5.3% rise in comparable-store sales.

Apart from delivering strong top and bottom lines, the company is also known for its shareholder-friendly moves. In fiscal year 2013 the company bought back 6.4 million shares worth $229 million, which includes 1.6 million shares, repurchased in the fourth quarter.

Additionally, management hiked its quarterly dividend by 10% to 22 cents a share and also approved a capital expenditure worth $220 million for fiscal 2014. This further instills confidence among investors as dividend hikes reflect a company's sound financial position and healthy cash flows.

The above catalysts facilitated the stock to hit a 52-week high of $46.94 on March 21, 2014, before eventually closing at $45.84. The stock currently trades at a forward P/E of 14.4x, a 12.2% discount to the peer group average of 16.4x, hinting at further upside potential. Moreover, its last trading price is 10.9% below the Zacks Analyst Price target of $51.44.

The company seems quite impressed with its performance in fiscal 2013. Also, it believes that by continuing to exploit opportunities like children's business, its shop-in-shop expansion in collaboration with its vendors, development of its store banner.com and enhancement of its assortments, it is likely to scale new heights in the coming years.

Going forward, Foot Locker expects to work on its store restructuring plans, increase its investments in technology in Europe and also further its women's business, which makes management optimistic of achieving its operational objectives.
 
Apart from Foot Locker, ANN INC. ANN, Genesco Inc. GCO and Hill International, Inc. HIL also hit 52 week highs of $43.61, $80.52 and $5.09, respectively on the last trading day.