Foot Locker Is Still The Best House On The Block, Least Hurt By Amazon

Foot Locker, Inc.

is expected to report its first quarter numbers on May 20, and Susquehanna expects EPS of $1.38, a penny below Street view. The brokerage also noted that the retailer is the least affected by Amazon.com, Inc.

. Analyst Christopher Svezia, who has a Positive rating on the stock, sees comps to grow 4-5 percent for the quarter. "While one-time costs may cause deleverage in 1Q (in line with guidance), we believe earnings growth can accelerate given solid comp momentum, easing f/x and normalized SG&A," Svezia wrote in a note. Noting that Foot Locker would benefit from demand for athletic footwear, the analyst said the retailer continues to have one of the strongest business models yielding profitable comp outperformance. Svezia highlighted that Foot Locker is not impacted by Amazon.com, Inc.

threat as "the way brands allocate product leaves FL significantly less susceptible to AMZN than other apparel dependent retailers." Brands mostly decide the allocation and merchandising strategy and most of who do not sell directly to Amazon. The analyst cited an example of the Curry 2.5 that will only be available at Under Armour Inc

DTC and Foot Locker. The analyst also noted that the company's FY16 outlook of double-digit earnings growth and mid-single-digit comp is "achievable." This compares to consensus at +10.7 percent and +4.9 percent at the print. In addition, the company's long-term forecast (about $6.00-$7.00 EPS by 2020) also "looks good." In addition, Svezia said the second quarter comp may increase in low single digit, which shouldn't be a surprise given a tough compare last year (double-digit growth). The analyst believes that comp should improve post first quarter earnings on comparable Jordan launches and solid other footwear launches above $150 that have consistently sold out (NMD, Ultra Boost, Curry 2.5, Olympics related, etc.). However, shares have dropped 14 percent since the fourth quarter results and "attractive ~5.5x EV/EBITDA (~10% discount to historical average) given solid total return visibility (+DD EPS + 1.9% dividend)." Commenting on the options movement, Svezia noted: "The options appear to be pricing in a +/- ~6% move for the company's upcoming earnings release, on the higher side when compared to the +/- 3.5% average move seen over the company's last eight releases." Shares of Foot Locker rose 2.75 percent to $59.06. The analyst has a price target of $82 on the stock.