FOOT LOCKER INC - TheStreet...FOOT LOCKER INC NYSE: FL July 19, 2015 BUY HOLD SELL BUY RATING SINCE...

FOOT LOCKER INCFLNYSE:

July 19, 2015

BUY HOLD SELL

BUYBUYBUYBUYBUYRATING SINCE 04/07/2010

TARGET PRICE $91.78A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F

Annual Dividend Rate$1.00

Annual Dividend Yield1.43%

Beta1.11

Market Capitalization$9.7 Billion

52-Week Range$47.11-$71.00

Price as of 7/16/2015$69.93

Sector: Consumer Goods & Svcs Sub-Industry: Apparel Retail Source: S&P

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracyor makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

PAGE 1Report Date: July 19, 2015

FL BUSINESS DESCRIPTIONFoot Locker, Inc. operates as an athletic shoes and

apparel retailer. The company operates in two

segments, Athletic Stores and Direct-to-Customers.

STOCK PERFORMANCE (%)

3 Mo. 1 Yr. 3 Yr (Ann)

Price Change 15.11 45.08 28.66

GROWTH (%)

Last Qtr 12 Mo. 3 Yr CAGR

Revenues 2.56 6.88 7.78

Net Income 13.58 19.64 20.21

EPS 17.27 22.95 22.70

RETURN ON EQUITY (%)

FL Ind Avg S&P 500

Q1 2015 21.21 32.09 13.71

Q1 2014 17.47 24.35 14.43

Q1 2013 16.44 19.80 13.15

P/E COMPARISON

18.65

FL

25.80

Ind Avg

21.40

S&P 500

EPS ANALYSIS¹ ($)

2015

Q1

1.29

2014

Q4

1.01

Q3

0.82

Q2

0.63

Q1

1.10

2013

Q4

0.81

Q3

0.70

Q2

0.44

Q1

0.90

NA = not available NM = not meaningful

1 Compustat fiscal year convention is used for all fundamentaldata items.

Weekly Price: (US$) SMA (50) SMA (100) 2 Years1 Year

2013 2014 2015

30

40

50

60

70

80

90

100

TARGET PRICE $91.78TARGET PRICE $91.78TARGET PRICE $91.78TARGET PRICE $91.78TARGET PRICE $91.78

Rating History

BUY

0

25Volume in Millions

COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History

RECOMMENDATIONWe rate FOOT LOCKER INC (FL) a BUY. This is based on the convergence of positive investment measures,

which should help this stock outperform the majority of stocks that we rate. The company's strengths can be

seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share

growth, increase in net income, revenue growth and largely solid financial position with reasonable debt

levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating

cash flow.

HIGHLIGHTSInvestors have apparently begun to recognize positive factors similar to those we have mentioned in this

report, including earnings growth. This has helped drive up the company's shares by a sharp 45.08% over the

past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although

almost any stock can fall in a broad market decline, FL should continue to move higher despite the fact that it

has already enjoyed a very nice gain in the past year.

FOOT LOCKER INC has improved earnings per share by 17.3% in the most recent quarter compared to the

same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth

over the past two years. We feel that this trend should continue. During the past fiscal year, FOOT LOCKER

INC increased its bottom line by earning $3.56 versus $2.85 in the prior year. This year, the market expects an

improvement in earnings ($4.02 versus $3.56).

The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is

less than that of the Specialty Retail industry average. The net income increased by 13.6% when compared to

the same quarter one year prior, going from $162.00 million to $184.00 million.

Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%.

Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue

appears to have helped boost the earnings per share.

FL's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that

there has been very successful management of debt levels.


July 19, 2015

Sector: Consumer Goods & Svcs Apparel Retail Source: S&P

Annual Dividend Rate

$1.00Annual Dividend Yield

1.43%Beta

1.11Market Capitalization

$9.7 Billion52-Week Range

$47.11-$71.00Price as of 7/16/2015

$69.93



PEER GROUP ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*

EBITDA Margin (TTM)

Rev

enue

Gro

wth

(TTM

)

0%45

%

20%8%

FAVORABLE

UNFAVORABLE TJXTJXTJXTJXTJXURBNURBNURBNURBNURBN

AEOAEOAEOAEOAEO

MWMWMWMWMW

DSWDSWDSWDSWDSW

LBLBLBLBLB

CHSCHSCHSCHSCHSASNAASNAASNAASNAASNA

ROSTROSTROSTROSTROST

GPSGPSGPSGPSGPSFLFLFLFLFL

Companies with higher EBITDA margins and

revenue growth rates are outperforming companies

with lower EBITDA margins and revenue growth

rates. Companies for this scatter plot have a market

capitalization between $2.3 Billion and $47.2 Billion.

Companies with NA or NM values do not appear.

*EBITDA – Earnings Before Interest, Taxes, Depreciation andAmortization.

REVENUE GROWTH AND EARNINGS YIELD

Earnings Yield (TTM)

Rev

enue

Gro

wth

(TTM

)

0%45

%

8%-1%

FAVORABLE

UNFAVORABLE TJXTJXTJXTJXTJXURBNURBNURBNURBNURBN

AEOAEOAEOAEOAEO

MWMWMWMWMW

DSWDSWDSWDSWDSWLBLBLBLBLB

CHSCHSCHSCHSCHSASNAASNAASNAASNAASNA

ROSTROSTROSTROSTROST

GPSGPSGPSGPSGPS

FLFLFLFLFL

Companies that exhibit both a high earnings yield

and high revenue growth are generally more

attractive than companies with low revenue growth

and low earnings yield. Companies for this scatter

plot have revenue growth rates between 0.2% and

41%. Companies with NA or NM values do not

appear.

INDUSTRY ANALYSISThe specialty retail industry includes very well-known home improvement, apparel, automotive, and other

narrow-focus stores such as Home Depot (HD), TJX Companies (TJX), Lowe’s Companies (LOW), Gap (GPS),

Bed Bath & Beyond (BBBY), Ross Stores (ROST), Limited Brands (LTD), O’Reilly Automotive (ORLY), PetSmart

(PETM), Carmax (KMX), and Build-A-Bear Workshop (BBW).

The variety of product focuses targeted by specialty retail companies is very diverse. These include but are

not limited to home improvement goods, pharmaceutical & beauty, shoes, electronics, and office supplies.

Also included are stores narrowly focused on music, books, wine, games, rentals, vitamins, lumber, sporting

goods, toys, jewelry, and fashion apparel for men, women, and teddy bears.

Some of the larger specialty retail companies also profit from the extension of credit to their customers with

branded credit cards.

Companies in this industry are judged based on the metric of same-store sales, a measurement that shows if

stores open for more than one year are increasing top line revenue or shrinking.

PEER GROUP: Specialty Retail

Recent Market Price/ Net Sales Net Income

Ticker Price ($)Company Name Cap ($M) Earnings TTM ($M) TTM ($M)

FL 69.93FOOT LOCKER INC 9,741 18.65 7,199.00 542.00

TJX 69.37TJX COMPANIES INC 47,198 21.68 29,452.87 2,235.41

URBN 36.10URBAN OUTFITTERS INC 4,626 21.36 3,375.78 227.73

AEO 18.31AMERN EAGLE OUTFITTERS INC 3,578 31.03 3,336.26 105.51

MW 62.35MENS WEARHOUSE INC 3,013 NM 3,507.16 -6.50

DSW 33.34DSW INC 2,699 18.52 2,552.63 162.03

LB 84.50L BRANDS INC 24,671 22.24 11,575.00 1,135.00

CHS 16.01CHICOS FAS INC 2,295 42.13 2,686.95 57.28

ASNA 13.87ASCENA RETAIL GROUP INC 2,261 22.37 4,815.50 102.30

ROST 52.96ROSS STORES INC 21,914 22.83 11,299.23 963.02

GPS 38.09GAP INC 15,897 13.32 16,318.00 1,241.00

The peer group comparison is based on Major Apparel Retail companies of comparable size.


July 19, 2015




1.43%Beta



$47.11-$71.00Price as of 7/16/2015

$69.93



COMPANY DESCRIPTIONFoot Locker, Inc. operates as an athletic shoes and

apparel retailer. The company operates in two segments,

Athletic Stores and Direct-to-Customers. The Athletic

Stores segment retails athletic footwear, apparel,

accessories, and equipment under various formats,

including Foot Locker, Lady Foot Locker, Kids Foot Locker,

Champs Sports, Footaction, and SIX:02, as well as

Runners Point, and Sidestep. As of January 31, 2015, it

operated 3,423 primarily mall-based stores in the United

States, Canada, Europe, Australia, and New Zealand.

The Direct-to-Customers segment sell athletic footwear,

apparel, equipment, team licensed products, and

private-label merchandise through Internet Websites,

mobile sites, and catalogs. This segment operates sites

for eastbay.com, final-score.com, eastbayteamsales.com,

footlocker.com, ladyfootlocker.com, six02.com

kidsfootlocker.com, footaction.com, footlocker.ca,

footlocker.eu, and champssports.com, as well as for

runnerspoint.com, sidestep-shoes.com, and sp24.com.

The company also provides franchise licenses to operate

its Foot Locker stores in the Middle East and the

Republic of Korea; and Runners Point and Sidestep

stores in Germany and Switzerland. It operates 78

franchised stores. The company was founded in 1879

and is headquartered in New York, New York.

FOOT LOCKER INC

112 West 34th Street

New York, NY 10120

USA

Phone: 212-720-3700

http://www.footlocker-inc.com

STOCK-AT-A-GLANCEBelow is a summary of the major fundamental and technical factors we consider when determining our

overall recommendation of FL shares. It is provided in order to give you a deeper understanding of our rating

methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is

important to note, however, that these factors only tell part of the story. To gain an even more comprehensive

understanding of our stance on the stock, these factors must be assessed in combination with the stock’s

valuation. Please refer to our Valuation section on page 5 for further information.

FACTOR SCORE

Growth out of 5 stars5.0Measures the growth of both the company's income statement and

cash flow. On this factor, FL has a growth score better than 90% of the

stocks we rate.

weak strong

Total Return out of 5 stars5.0Measures the historical price movement of the stock. The stock

performance of this company has beaten 90% of the companies we

cover.

weak strong

Efficiency out of 5 stars4.5Measures the strength and historic growth of a company's return on

invested capital. The company has generated more income per dollar of

capital than 80% of the companies we review.

weak strong

Price volatility out of 5 stars5.0Measures the volatility of the company's stock price historically. The

stock is less volatile than 90% of the stocks we monitor.

weak strong

Solvency out of 5 stars4.5Measures the solvency of the company based on several ratios. The

company is more solvent than 80% of the companies we analyze.

weak strong

Income out of 5 stars3.5Measures dividend yield and payouts to shareholders. The company's

dividend is higher than 60% of the companies we track.

weak strong

THESTREET RATINGS RESEARCH METHODOLOGY

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both

price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to

perform against a general benchmark of the equities market and interest rates. While our model is

quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include

expected equities market returns, future interest rates, implied industry outlook and forecasted company

earnings. Objective elements include volatility of past operating revenues, financial strength, and company

cash flows.

Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown

as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of

acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings

growth; and the financial strength of the underlying company as compared to its stock's valuation as

compared to projected earnings growth; and the financial strength of the underlying company as compared

to its stock's performance. These and many more derived observations are then combined, ranked, weighted,

and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of

selecting stocks.


July 19, 2015




1.43%Beta



$47.11-$71.00Price as of 7/16/2015

$69.93



Consensus EPS Estimates² ($)IBES consensus estimates are provided by Thomson Financial

0.69

Q2 FY15

4.02 E

2016(E)

4.45 E

2017(E)

INCOME STATEMENT

Q1 FY15 Q1 FY14

Net Sales ($mil) 1,916.00 1,868.00

EBITDA ($mil) 325.00 292.00

EBIT ($mil) 290.00 256.00

Net Income ($mil) 184.00 162.00

BALANCE SHEET

Q1 FY15 Q1 FY14

Cash & Equiv. ($mil) 986.00 1,007.00

Total Assets ($mil) 3,631.00 3,669.00

Total Debt ($mil) 133.00 138.00

Equity ($mil) 2,555.00 2,593.00

PROFITABILITY

Q1 FY15 Q1 FY14

Gross Profit Margin 34.97% 34.58%

EBITDA Margin 16.96% 15.63%

Operating Margin 15.14% 13.70%

Sales Turnover 1.98 1.84

Return on Assets 14.92% 12.34%

Return on Equity 21.21% 17.47%

DEBT

Q1 FY15 Q1 FY14

Current Ratio 3.58 3.54

Debt/Capital 0.05 0.05

Interest Expense 3.00 3.00

Interest Coverage 96.67 85.33

SHARE DATA

Q1 FY15 Q1 FY14

Shares outstanding (mil) 140 145

Div / share 0.25 0.22

EPS 1.29 1.10

Book value / share 18.28 17.92

Institutional Own % NA NA

Avg Daily Volume 1,801,077 2,009,635

2 Sum of quarterly figures may not match annual estimates due touse of median consensus estimates.

FINANCIAL ANALYSISFOOT LOCKER INC's gross profit margin for the first quarter of its fiscal year 2015 is essentially unchanged

when compared to the same period a year ago. The company has grown sales and net income during the

past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the

growth of the average competitor within its industry.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing

by 1.46% from the same quarter last year.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the

next 12-months. To learn more visit www.TheStreetRatings.com.


July 19, 2015




1.43%Beta



$47.11-$71.00Price as of 7/16/2015

$69.93



RATINGS HISTORYOur rating for FOOT LOCKER INC has not changed

since 4/7/2010. As of 7/16/2015, the stock was

trading at a price of $69.93 which is 1.5% below its

52-week high of $71.00 and 48.4% above its 52-week

low of $47.11.

2 Year Chart

2013 2014

$40

$50

$60

$70

BU

Y: $

36.4

1

MOST RECENT RATINGS CHANGES

Date Price Action From To

7/16/13 $36.41 No Change Buy Buy

Price reflects the closing price as of the date listed, if available

RATINGS DEFINITIONS &DISTRIBUTION OF THESTREET RATINGS

(as of 7/16/2015)

45.36% Buy - We believe that this stock has the

opportunity to appreciate and produce a total return of

more than 10% over the next 12 months.

30.64% Hold - We do not believe this stock offers

conclusive evidence to warrant the purchase or sale of

shares at this time and that its likelihood of positive total

return is roughly in balance with the risk of loss.

24.00% Sell - We believe that this stock is likely to

decline by more than 10% over the next 12 months, with

the risk involved too great to compensate for any

possible returns.

TheStreet Ratings14 Wall Street, 15th FloorNew York, NY 10005www.thestreet.comResearch Contact: 212-321-5381

Sales Contact: 866-321-8726

VALUATIONBUY. This stock's P/E ratio indicates a discount compared to an average of 25.80 for the Specialty Retail

industry and a discount compared to the S&P 500 average of 21.40. Conducting a second comparison, its

price-to-book ratio of 3.82 indicates a premium versus the S&P 500 average of 2.85 and a significant discount

versus the industry average of 8.78. The price-to-sales ratio is below both the S&P 500 average and the

industry average, indicating a discount. Upon assessment of these and other key valuation criteria, FOOT

LOCKER INC proves to trade at a discount to investment alternatives within the industry.

1 2 3 4 5Price/Earningspremium discount

FL 18.65 Peers 25.80

• Discount. A lower P/E ratio than its peers can

signify a less expensive stock or lower growth

expectations.

• FL is trading at a significant discount to its peers.

1 2 3 4 5Price/CashFlowpremium discount

FL 14.88 Peers 15.86

• Average. The P/CF ratio, a stock’s price divided by

the company's cash flow from operations, is useful

for comparing companies with different capital

requirements or financing structures.

• FL is trading at a valuation on par to its peers.

1 2 3 4 5Price/Projected Earningspremium discount

FL 15.71 Peers 21.06

• Discount. A lower price-to-projected earnings ratio

than its peers can signify a less expensive stock or

lower future growth expectations.

• FL is trading at a discount to its peers.

1 2 3 4 5Price to Earnings/Growthpremium discount

FL 1.46 Peers 2.04

• Discount. The PEG ratio is the stock’s P/E divided

by the consensus estimate of long-term earnings

growth. Faster growth can justify higher price

multiples.

• FL trades at a significant discount to its peers.

1 2 3 4 5Price/Bookpremium discount

FL 3.82 Peers 8.78

• Discount. A lower price-to-book ratio makes a

stock more attractive to investors seeking stocks

with lower market values per dollar of equity on the

balance sheet.

• FL is trading at a significant discount to its peers.

1 2 3 4 5Earnings Growthlower higher

FL 22.95 Peers 24.49

• Average. Elevated earnings growth rates can lead

to capital appreciation and justify higher

price-to-earnings ratios.

• FL is expected to keep pace with its peers on the

basis of earnings growth.

1 2 3 4 5Price/Salespremium discount

FL 1.36 Peers 1.52

• Discount. In the absence of P/E and P/B multiples,

the price-to-sales ratio can display the value

investors are placing on each dollar of sales.

• FL is trading at a discount to its industry on this

measurement.

1 2 3 4 5Sales Growthlower higher

FL 6.88 Peers 8.96

• Lower. A sales growth rate that trails the industry

implies that a company is losing market share.

• FL trails its peers on the basis of sales growth

DISCLAIMER:

The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but

TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided

via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as

other third-party data providers.

TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided

for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or

other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a

qualified securities professional, before you make any investment. None of the information contained in this report constitutes,

or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a

determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of

the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the

investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at

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FOOT LOCKER INC - TheStreet...FOOT LOCKER INC NYSE: FL July 19, 2015 BUY HOLD SELL BUY RATING SINCE...

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