Looking at Foot Locker, Inc.'s (NYSE:FL) earnings update in May 2019, analyst consensus outlook seem bearish, as a 1.7% fall in profits is expected in the upcoming year. However, this is still an improvement on its past 5-year earnings growth rate of -4.1%, on average. Presently, with latest-twelve-month earnings at US$541m, we should see this fall to US$532m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Foot Locker in the longer term?
The view from 19 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for FL, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 2.4% based on the most recent earnings level of US$541m to the final forecast of US$562m by 2022. This leads to an EPS of $5.72 in the final year of projections relative to the current EPS of $4.68. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 6.8% to 6.6% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Foot Locker, I've put together three fundamental aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Foot Locker worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Foot Locker is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Foot Locker? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.