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Foot Locker’s 3Q17 Earnings: Expect the Slide to Continue

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Foot Locker’s 3Q17 Earnings: Expect the Slide to Continue PART 4 OF 4

Foot Locker Stock Has 30% Upside

Foot Locker stock hit by weak results

Currently, Foot Locker (FL) is sitting at a YTD (year-to-date) loss of ~57% due to two weak results in a row. The company lost 17% after its 1Q17 results and 29% after its 2Q17 results. After its 2Q17 results, Foot Locker witnessed its worst single-day fall since the recession.

Other specialty athletic retailers are also facing challenges. DSW (DSW), Finish Line (FINL), and Dick’s Sporting Goods (DKS) have fallen 50%, 47%, and 15%, respectively, to date.

Foot Locker has underperformed the S&P 500 Apparel and Accessories Index (+6.7%) and the S&P 500 Index (SPX) (+15%).

What to expect from Foot Locker’s stock price

Wall Street seems positive on Foot Locker stock. Analysts expect Foot Locker’s price to rise ~30% to $39.89 in the next 12 months.

Analysts’ actions

Foot Locker faced several downgrades after its 2Q17 results. As many as eight brokerage houses, including Deutsche Bank, JPMorgan Chase, and Wells Fargo, lowered the company’s recommendations.

Foot Locker Stock Has 30% Upside

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Buckingham lowered Foot Locker from a “buy” to a “neutral” rating on October 23.

Currently, 33% of the analysts covering Foot Locker recommend buying the stock, 57% recommend holding it, and 10% recommend selling it. Foot Locker is tracked by 21 Wall Street analysts.

The company is rated as a 2.5 on a scale of one (strong buy) to five (strong sell). It was rated as a 1.8 in April.

Despite the downgrades and rating deterioration, Foot Locker continues to be rated better than DSW (2.6), Finish Line (3.3), and Dick’s Sporting Goods (2.9).

Investors looking for exposure to Foot Locker can consider the First Trust Consumer Discretionary AlphaDEX Fund ETF (FXD), which invests 3% of its portfolio in the company.

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