Foot Locker, Inc. (NYSE:FL), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$35.15 at one point, and dropping to the lows of US$21.52. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Foot Locker's current trading price of US$22.24 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Foot Locker's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In Foot Locker?
The stock seems fairly valued at the moment according to our valuation model. It's trading around 3.93% above our intrinsic value, which means if you buy Foot Locker today, you'd be paying a relatively reasonable price for it. And if you believe the company's true value is $21.40, there's only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Foot Locker's share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Foot Locker generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted revenue growth of 2.6% expected over the next couple of years, growth doesn't seem like a key driver for a buy decision for Foot Locker, at least in the short term.
What This Means For You
Are you a shareholder? FL's future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you've been keeping an eye on FL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 1 warning sign for Foot Locker and we think they deserve your attention.
If you are no longer interested in Foot Locker, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.