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Foot Locke Case Summary

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Foot Locker (FL) Spikes by 11% following Earnings Beat; is it a Good Stock to Buy and Hold?
Foot Locker’s (NYSE:FL) share price soared above 11% in latest trading session following a strong financial performance in the second quarter. The company has beaten both revenue and earnings estimates for the second quarter by $20 million and $0.04 per share, respectively.
In the second quarter, the company generated an impressive growth in revenue of above 5% on a constant currency basis, while its earnings per share improved nearly 11% from the same period of last year. Its strategy of enhancing its leadership position in the athletics industry continues to expand its sales growth.
The company is working on a strategy of sharing its businesses innovation with its key vendors. This will further enable Foot Locker to …show more content…

Aside from investments, Foot Locker’s management is also very interested in returning a big chunk of cash to its investors through buybacks and dividends.
In the last six months alone, it returned $350 million to share holders through dividends and buybacks. The company currently offers a quarterly dividend of $0.275 per share, yielding at around 1.61%. The company’s dividends are completely safe, as the consistent growth in earnings is enhancing its cash flow quarter over quarter.
Amid strong performances, the company’s share price surged nearly 25% in the last three months. Despite a recent rally, Foot Locker’s shares look undervalued trading at only 17 times to earnings compared with the industry’s average of 22 times. FL’s stock also looks undervalued considering its double digit earnings growth potential and solid dividends. Overall, Foot Locker is a good stock to buy and hold since it offers a steady price appreciation and firm

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