Foot Locker Intrinsic Value Calculation – Is Foot Locker Struggling to Keep Up in the Consumer Cyclical Sector?

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Foot Locker ($NYSE:FL) Inc., a leading global retailer of athletic footwear, apparel and accessories, has been a dominant player in the Consumer Cyclical sector for many years. The company’s financial success has been driven by its flagship stores, including Foot Locker, Lady Foot Locker, Champs Sports and Footaction, but it has also expanded to include online sales and international stores. Recently, however, Foot Locker has been struggling to keep up with competitors in the Consumer Cyclical sector. Analysts have pointed to a number of factors contributing to Foot Locker’s recent decline.

First, the growing popularity of athleisure wear has taken business away from traditional stores like Foot Locker, as consumers prefer more relaxed apparel options with leisure in mind.

Additionally, the rise of e-commerce has decreased the number of people visiting physical stores. Furthermore, Foot Locker has been slow to respond to consumer trends such as personalization and customization, which have become increasingly important for shoppers in recent years. These factors have combined to create an unfavorable situation for Foot Locker. This could include making strategic investments in technology and focusing on innovative products, services and marketing strategies that will draw customers back to its stores.

Price History

As of Friday, Foot Locker stock opened at $20.5 but closed the day down by 3.8%, settling at $19.6 compared to the prior closing price of $20.4. The consumer cyclical sector is one that is heavily affected by the economic and consumer climate, meaning that as the economy goes, so does the industry. With the current economic state of affairs, it is understandable that Foot Locker’s stock has taken a slight dip in value. Although the 3.8% drop is concerning, it could also be seen as a slight correction in the market after a streak of positive gains over the past few weeks. Live Quote…

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for Foot Locker. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for Foot Locker. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for Foot Locker. More…

Key Ratios Snapshot

Some of the financial key ratios for Foot Locker are shown below. More…

Analysis – Foot Locker Intrinsic Value Calculation

At GoodWhale, we recently conducted an analysis of the fundamentals of FOOT LOCKER. According to our proprietary Valuation Line, the intrinsic value of a share of FOOT LOCKER is approximately $43.5. Currently, FOOT LOCKER stock is trading at $19.6, representing a 55.0% discount to our estimated intrinsic value. This indicates that FOOT LOCKER is currently trading in a state of undervaluation, providing a potential long-term opportunity for investors. More…

Peers

The company operates in more than 20 countries and has over 3,500 stores. Its main competitors are Zumiez Inc, Abercrombie & Fitch Co, and TJX Companies Inc.

– Zumiez Inc ($NASDAQ:ZUMZ)

Zumiez is a publicly traded company with a market capitalization of 398.36 million as of 2022. The company has a return on equity of 16.06%. Zumiez is a specialty retailer of apparel, footwear, and accessories for young men and women. The company operates over 800 stores in the United States, Canada, and Europe.

– Abercrombie & Fitch Co ($NYSE:ANF)

Abercrombie & Fitch Co is an American lifestyle retailer that focuses on casual wear for young consumers. The company operates through three segments: Domestic, International, and Direct-to-Consumer. As of 2022, Abercrombie & Fitch Co had a market capitalization of 816.97 million and a return on equity of 14.85%. The company’s domestic segment includes stores in the United States and Puerto Rico. The international segment consists of stores in Europe, Asia, Canada, Mexico, and the Middle East. The Direct-to-Consumer segment includes e-commerce operations in the United States and international markets.

– TJX Companies Inc ($NYSE:TJX)

The TJX Companies, Inc. is an American multinational off-price department store chain, based in Framingham, Massachusetts. It operates TJ Maxx, Marshalls, HomeGoods, Sierra Trading Post, and HomeSense stores in the United States; Winners, HomeSense, and Marshalls stores in Canada; T.K. Maxx stores in the United Kingdom, Ireland, Germany, Poland, Austria, and the Netherlands; and Trade Secret stores in Australia.

Summary

Foot Locker Inc. is a major retailer in the consumer cyclical sector. Investing analysis on the company has been largely bearish in recent months, as the stock price has seen a sharp decline. The reason for this downturn has largely been attributed to weakening consumer confidence in the retail market and a general trend of decreased spending.

Additionally, Foot Locker’s financials have also been affected by the recent macroeconomic slowdown, with sales and profits falling short of expectations. Looking ahead, it appears that the company will need to make significant changes in order to revive its fortunes and remain competitive in the sector. Investors should proceed cautiously and evaluate the stock carefully before making an investment decision.