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Foot Locker (FL)
Foot Locker
has been making new 52 week highs and has run over 15% since I last
wrote about
it as a momentum Rank Buy on January
30th. More importantly, in the past
couple weeks
the company solidified their fundamental story, increased their
quarterly dividend
and approved a 400 million dollar share buyback program.
Even with all
this positive news, does this stock still have upside from these price
levels?
Recent
Developments
Foot Locker
remains a Zacks Rank 1 momentum stock after it reported strong earnings
on
March 1st. The athletic retailer
earned net income of $81 million or $0.53 per share (GAAP), which
represented
an increase of 47% over the $0.36 per share in the same quarter in
2010. This
was also the eighth consecutive quarter of sales and profit increases
over the
comparable prior year period for Foot Locker.
Non-GAAP
earnings were $0.55 per share for the quarter and $1.82 per share for
the full
year (2011) which was a record for the athletic company.
Year over
year comp sales were up 7.5% in Q42011; this was after a 7.3% increase
in
Q42010. For the entire year, sales were up 11.4% and got a boost from
just
about all divisions of the company. They
also continued to see improvements in gross margin for the 4th
quarter of 110 basis points, but this step up was slower compared to
the prior
three quarters. This seems to be the
theme as many companies are reaching peak efficiency.
The Board of
Directors declared a quarterly cash dividend of $0.18 per share,
payable on
April 27, 2012. This dividend represents
a 9% increase over the previous quarterly dividend amount and equals
and
annualized rate of $0.72 per share or 2.4% yield on Thursday’s closing
price.
In addition, the Board of Directors also approved a new three year,
$400
million share repurchase program which replaces the company’s previous
$250
million program.
Moving
Forward
Foot Locker’s
strong results set the foundation for the company’s next move higher.
They are expanding several lines of athletic
footwear and apparel to help stimulate growth. Online presence and
expansion
were a focal point in their most recent earnings call; the
CEO noted that “total Direct-to-Customers
segment posted sales that were about 11% of total sales in the fourth
quarter,
a new high. We had over 64 million visitors to our websites in the
quarter, and
we have millions of fans on our Facebook and Twitter sites.”
In 2012, the
company expects comp gains in the mid single digit range and expects
all divisions
to be comp positive for the year.
There was
concern expressed about Foot Locker Europe which has had a tough time
getting
off the ground in Q4. The company blamed
harsh weather, but investors will want to see that division improve
dramatically in the current quarter if weather was really the cause.
They also
plan to open 82 new stores and close 75 stores in 2012, which would be
the
first time in many years that FL opened more stores than were closed.
According to
the company’s forward statements, they feel confident that 2012 will be
a
strong year and it seems that analysts agree, being that just about all
of them
have hiked their estimates for next quarter’s results as well as full
year 2013
and 2014.
The current Zacks Consensus Estimate is for FL to earn $0.72 in the
quarter. Analysts are also looking for
23% growth in this year and 9% growth in the following year from FL.
At a forward P/E
of about 13.5, the company is still fairly valued here and may attract
some
bulls after all…
This
Week’s Momentum Zacks Rank Buy Stocks:
Valspar
(VAL)
Where there is smoke there’s fire, or in this case, where there is home
improvement growth (and more), there is paint.
Home Depot and Lowes both reported
strong earnings this past season,
which is good news for Valspar as home improvement continues to
strengthen.
Housing prices are bottoming, but more importantly, transactions are
increasing
and many of the properties being sold are distressed or multi-family
developments. Both of which will most likely require a common element
for the
new owner(s); paint!
Even though Valspar provides Lowes
with a huge array of premium coatings
to sell to customers, Lowes is not the only way Valspar is making money.
Valspar’s diverse selection of
coatings of all types for many industries
may make it a second derivative play for the global economic recovery
that is
underway. READ
FULL STORY
Zumiez
(ZUMZ)
While most of you reading this probably haven’t bought a Zumiez
product, that doesn’t mean tons of kids, teens and young adults
(especially
hipsters, skaters, BMX’ers, etc) aren’t buying en mass.
In fact Zumiez reported record
earnings on March 8th and saw sales
increase almost 18% in the fourth quarter that ended on January
28th.
Yesterday’s strong retail sales data also added credence and perhaps
stability
to the Zumiez numbers and future outlook.
Can this niche retailer keep their
sales growth and stock momentum going
into 2012? READ
FULL STORY
Dollar
Thrifty Automotive Group, Inc. (DTG)
It was less than two months ago when DTG hit the Momentum list as Rank
Buy. At the time, the stock was trading at $71 a
share. Shares have
since rallied 13% to a new 52 week high of over $80 and continue to
build on
the tremendous momentum we have seen since October 2011.
Prior to its most recent report, DTG
showed strong Q3 results and beat
estimates across the board. They saw improving rent
rates and
increasing demand. DTG was looking strong going into their Q4
report on
February 21st and they delivered. READ
FULL STORY
IntercontinentalExchange
(ICE)
Just about everything in our lives that we use, drive, fly, eat and
essentially need to survive comes in part or in whole from a
commodity.
Commodities are generally traded using futures contracts that
help
professionals, farmers and big companies lock in prices for different
assets. Commodities include everything from oil and gas, to
gold and
silver down to coffee and the sugar you put in it. Even the
dollars that
you spend are a commodity of sorts.
Our consumption of commodities and
perhaps more importantly, the trading
and risk management of those commodities are an essential and growing
part of
global business.
Advances in global economic
integration as well as financial reform
measures such as Dodd-Frank and others are moving market participants
to trade
their financial instruments on centralized, monitored exchanges so we
can help
avert another financial meltdown like we had in 2008.
For Intercontinental Exchange, it has
the capability and could stand to
benefit further from an increase in exchange traded products including
derivatives, futures and other financial instruments. The
question really
is how much and how quickly. READ
FULL STORY
Jared
A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
market-beating
Zacks
Whisper Trader Service.
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