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Should Value Investors Buy Foot Locker (FL) Stock?

Zacks

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system’s “Value” category. Stocks with both “A” grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Foot Locker (FL). FL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.49, which compares to its industry’s average of 15.04. Over the past 52 weeks, FL’s Forward P/E has been as high as 12.72 and as low as 9.07, with a median of 10.71.


We should also highlight that FL has a P/B ratio of 2.60. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. FL’s current P/B looks attractive when compared to its industry’s average P/B of 4.01. Over the past 12 months, FL’s P/B has been as high as 2.81 and as low as 1.93, with a median of 2.30.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Foot Locker is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FL feels like a great value stock at the moment.


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Zacks Investment Research
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