Tread Carefully When It Comes To Foot Locker, Inc. (FL)

Despite closing -0.35 points lower on 14 March, Foot Locker, Inc. (NYSE:FL) remains a key investment for many, but the stock is also a popular trading vehicle. Here’s how to trade it using charts and trading levels Friday. The shares dropped -0.59 percent at $59.35 with a light trade volume of 2.26 million shares. After opening the session at $59.68, the shares went as high as $59.8 and as low as $59.005, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $6.93 billion and now has 116.72 million shares outstanding. Foot Locker, Inc. (FL) stock has gained 2.45 percent of market value in 21 trading days.

FL stock has a trailing 3-year beta of 0.72, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $4.42 a share in the trailing twelve months. The stock’s value has surged 11.56 percent year to date (YTD) against a rise of 35.32 percent in 12 month’s time. The company’s shares still trade -12.72 percent away from its 1-year high of $68.00 and 48.3 percent up from 52-week low of $40.02. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

History has shown that shares in Foot Locker, Inc. have gone up on 22 different earnings reaction days and are predicted to add 0.07 percent when the company reports upcoming earnings. Investors will get their next glimpse of FL’s Q1 earnings on May 24. Analysts are forecasting revenue to climb 4 percent to $2.11B in the fiscal first quarter, while earnings are seen soaring by nearly 13.1 percent to $1.64 per share. It earned $1.56 per share, better than the $1.4, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $2.27B, better than the $2.19B analysts expected. Earnings are estimated to increase by -39.1 percent this year, 8.9 percent next year and continue to increase by 10.46 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $58.97. Below this, the next support is placed in the zone of $58.59. Till the time, the FL stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 47.69 on daily chart, which may remain a cause for concern. If the price breaks below $58.59 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $59.76 mark may result into a pull-back move towards $60.18 level.

Shares of Foot Locker, Inc. (FL) are trading at a P/E ratio of 7.94 times earnings reported for the past 12 months. The industry FL operates in has an average P/E of 34.83. Its P/E ratio went as low as 8.76X and as high as 17.58 over the 5-year span.Further, it is sporting a 0.87 on the Price-to-Sales ratio. Compare this with the industry average P/S of 2.33. 31.8 percent is the gross profit margin for Foot Locker, Inc. and operating margin sits at 7.1 percent. Along with this, the net profit margin is 3.9 percent.