Foot Locker, Inc. (FL) is leaping higher like a pole vaulter donning Nike’s latest shoe, recently hitting a new multi-year high after reporting blowout Q1 results that came in well ahead of expectations. With estimates on the rise and strong industry rank, this Zacks #1 rank stock is a momentum baller.
Company Description
Foot Locker operates as a retailer of footwear, athletic apparel and various accessories worldwide. The company was founded in 1879 in New York City and has a market cap of $3.9 billion.
Foot Locker has been trending higher for most of the last 9 months, but shares got an extra boost into a new multi-year high in late May when the company reported awesome Q1 results that handily beat expectations.
First-Quarter Results
Revenue for the period was up 13% from last year to $1.45 billion. Earnings also looked great, coming in at 60 cents, 36% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 43% over the last four quarters.
The strong showing was driven by impressive same-store sales results, up 12.8% from last year on growing consumer confidence and global economic stability. Gross margin also increase, climbing 200 basis points as the company continues to focus on managing costs.
Foot locker was also busy returning value to shareholders, repurchasing 1.51 million shares during the quarter for $30 million under its $250 million share buyback authorization.
Financial Position
The company also remains focused on building its already strong financial position, with cash and short-term investments up $183 million from last year to $799 million against total debt of just $136 million.
Estimates
We saw some pretty solid movement in estimates off the good quarter, with the current year up 9% from last year to $1.46. The next-year estimate tacked on 10 cents to $1.63, a solid 12% growth projection.
Valuation
Although FL has seen big gains over the last year, its forward P/E of 17X is only a slight premium to its peer average of 14X.
12-Month Chart
On the chart, shares jumped into a new multi-year high on the good quarter after trending higher for most of the last 9 months, Look for support from the long-term trend on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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