Is Foot Locker (FL) Stock Undervalued Right Now?

Mar 20, 2024

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Foot Locker (FL). FL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.33. This compares to its industry's average Forward P/E of 14.70. FL's Forward P/E has been as high as 11.54 and as low as 6.40, with a median of 9.25, all within the past year.

FL is also sporting a PEG ratio of 0.25. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FL's industry currently sports an average PEG of 0.73. Over the past 52 weeks, FL's PEG has been as high as 0.28 and as low as 0.20, with a median of 0.24.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. FL has a P/S ratio of 0.28. This compares to its industry's average P/S of 0.39.

Finally, our model also underscores that FL has a P/CF ratio of 5.53. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.83. Over the past 52 weeks, FL's P/CF has been as high as 8.90 and as low as 3.86, with a median of 5.57.

Investors could also keep in mind Urban Outfitters (URBN), an Retail - Apparel and Shoes stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Shares of Urban Outfitters are currently trading at a forward earnings multiple of 12.70 and a PEG ratio of 0.71 compared to its industry's P/E and PEG ratios of 14.70 and 0.73, respectively.

Over the past year, URBN's P/E has been as high as 16.59, as low as 8.46, with a median of 11.44; its PEG ratio has been as high as 0.92, as low as 0.47, with a median of 0.24 during the same time period.

Furthermore, Urban Outfitters holds a P/B ratio of 1.85 and its industry's price-to-book ratio is 2.98. URBN's P/B has been as high as 1.85, as low as 1.07, with a median of 1.38 over the past 12 months.

These are only a few of the key metrics included in Foot Locker and Urban Outfitters strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, FL and URBN look like an impressive value stock at the moment.

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