Recent Bull Run In Foot Locker Leaves Little Room For Upside Following Q3 Report

Foot Locker, Inc. (NYSE: FL) is set to report its third-quarter numbers on November 18. But, analysts at Baird said they would be surprised to see meaningful upside in shares, even if the company delivers strong results, as it believes the good report may already be priced in to the shares.

Quarter's Backdrop

The analysts feel the stock “may be due for a breather” following its 17 percent outperformance versus S&P 500 since the second-quarter report.

That said, the brokerage believes the valuation is still “reasonable/attractive” thanks to Foot Locker’s strong operational metrics and double-digit EPS growth profile.

Baird's Expectations

For the third quarter, Baird anticipates EPS to grow 10 percent to $1.10, in line with consensus and guidance ("double-digit growth or close to it").

“We are comfortable that FL reached comps estimates (modeled +4.6 percent; consensus +4.8 percent; guidance +mid-single-digits) although we are not anticipating meaningful upside,” analyst Jonathan Komp wrote in a note.

Komp said Foot Locker’s third quarter saw strong traffic/pricing, and continued strength in categories such as running, casuals/classic and basketball. Further, the company is a key beneficiary of increased competition among the major brands such as adidas AG (ADR) (OTC: ADDYY) and Under Armour Inc (NYSE: UA).

“All in, we think comps in the mid-single-digits would be enough to satisfy current investor expectations and support confidence in the outlook,” Komp added.

Komp has an Outperform rating on the stock, with a target price of $79.

At last check, shares of Foot Locker were down 1.22 percent at $70.58.

Image Credit: By Lionel Allorge (Own work) [GFDL, CC BY-SA 3.0 or FAL], via Wikimedia Commons