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Piper Jaffray Downgrades Foot Locker to ‘Neutral’

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Price movement

Foot Locker (FL) has a market cap of $9.7 billion. It rose 1.8% to close at $73.10 per share on November 21, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.3%, 7.6%, and 14.3%, respectively, on the same day.

FL is trading 6.5% above its 20-day moving average, 7.9% above its 50-day moving average, and 17.8% above its 200-day moving average.

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Related ETF and peers

The Schwab US Mid-Cap ETF (SCHM) invests 0.33% of its holdings in Foot Locker. The YTD price movement of SCHM was 12.4% on November 21.

The market caps of Foot Locker’s competitors are as follows:

  • Walmart (WMT) — $216.6 billion
  • Designer Shoe Warehouse (DSW) — $1.9 billion

Foot Locker’s rating

On November 21, 2016, Piper Jaffray downgraded Foot Locker’s rating to “neutral” from “overweight” and set the stock’s price target at $72.0 per share.

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Foot Locker’s 3Q16 performance

Foot Locker reported 3Q16 sales of $1.9 billion, a YoY (year-over-year) rise of 5.1% compared to sales of $1.8 billion in 3Q15. The company’s cost of sales as a percentage of sales fell 10 basis points YoY in 3Q16.

Foot Locker’s net income and EPS (earnings per share) rose to $157.0 million and $1.17, respectively, in 3Q16, compared to $80.0 million and $0.57, respectively, in 3Q15. It reported non-GAAP (generally accepted accounting principles) EPS of $1.13 in 3Q16, a YoY rise of 13.0%.

FL’s cash and cash equivalents fell 1.5%, and its merchandise inventories rose 1.9% YoY in 3Q16. Its current ratio rose to 4.6x, and its debt-to-equity ratio fell to 0.40x in 3Q16, compared to its current and debt-to-equity ratios of 3.8x and 0.45x, respectively, in 3Q15.

Foot Locker declared a dividend

Foot Locker has declared a quarterly cash dividend of $0.28 per share on its common stock. The dividend will be paid on January 27, 2017, to shareholders of record on January 13, 2017.

Next, we’ll discuss Spectrum Brands Holdings (SPB).

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