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Stock Spotlight Designer  5/30/2024

Custom Instruction: Advanced Investor

About Foot Locker (FL)

Foot Locker, Inc., through its subsidiaries, operates as a footwear and apparel retailer in North America, Europe, Australia, New Zealand, Asia, and the Middle East. Its brand portfolio includes Foot Locker, a brand comprising sneakers and apparel; Kids Foot Locker, which offers athletic footwear, apparel, and accessories for children; and Champs Sports that operates as a mall-based specialty athletic footwear and apparel retailer. 

The company also provides its products under the WSS brand, an athletic-inspired retailer; and atmos brand, a digitally-led, culturally connected brand featuring sneakers and apparel. It offers its products through physical stores, various e-commerce sites, and mobile apps. The company was formerly known as Venator Group, Inc. and changed its name to Foot Locker, Inc. in November 2001. The company was founded in 1879 and is headquartered in New York, New York.

  • Sector: Consumer Discretionary
  • Industry: Specialty Retail
  • Market Capitalization: 2,128 million USD
  • EBITDA: 386 million USD
  • Dividend Yield: 5.21%
  • Revenue (TTM): 8.168 billion USD
  • Gross Profit (TTM): 2.804 billion USD
  • 52-Week High: 35.60 USD
  • 52-Week Low: 14.56 USD
  • Latest Price: 22.52 USD (as of 2024-05-29)

Risk

Investing in Foot Locker isn't without its risks. In the past year, FL has experienced a higher-than-usual level of volatility, with an annualized standard deviation of 57.72%, significantly higher than the S&P 500's 17.33%. 

The Sharpe ratio for Foot Locker over the past year stands at -0.59, compared to the S&P 500's 1.94. A negative Sharpe ratio suggests that the return on FL has been less than the risk-free rate after adjusting for risk. Additionally, FL's maximum drawdown over the past year was -63.19%, indicating a substantial peak-to-trough decline within this period.

The Value at Risk (VaR) at a 99% confidence level is -7.56%, which means that there is a 1% chance that the stock could lose more than this percentage in a single day based on historical price movements. This is notably higher than the S&P 500's VaR of -3.06%. On the upside, FL's potential gain in a single day at a 99% confidence level is estimated at 7.81%, compared to the S&P 500's 2.61%.

News Analysis

Recent news coverage of Foot Locker has been largely positive, reflecting investor optimism about the company's turnaround efforts and financial performance. According to an article from The Motley Fool (Thu, 30 May 2024), Foot Locker's stock surged after management reiterated its guidance and expressed confidence in store remodeling plans to maintain relevance.

Investopedia (Thu, 30 May 2024) reported that Foot Locker's shares soared as the company's first-quarter results exceeded expectations, suggesting that its turnaround strategies are effective. Similarly, Proactive Investors (Thu, 30 May 2024) highlighted that Foot Locker's shares rocketed close to 30% after first-quarter profits outperformed analysts' estimates.

On a more neutral note, articles from Zacks Investment Research (Thu, 30 May 2024) discussed broader economic data alongside Foot Locker's earnings report without a strong positive or negative sentiment. Another article from Zacks (Thu, 30 May 2024) analyzed how Foot Locker's key metrics compared to Wall Street estimates and year-ago values.

News Sentiment Analysis

The sentiment data from EODHistoricalData.com provides valuable insights into how recent news articles have been perceived by the market. The sentiment score ranges from -1 for negative sentiment to +1 for positive sentiment.

For the date range of May 29, 2024, the average sentiment score was exceptionally high at 0.98 based on one article. Over the past week (from May 23 to May 30, 2024), the average sentiment score remained at a strong positive level of 0.98 across three articles.

Extending the analysis to the last four weeks (from May 2 to May 30, 2024), the average sentiment score was slightly lower but still positive at 0.70 based on five articles. These scores suggest that recent news coverage has generally been favorable towards Foot Locker, which could influence investor sentiment and stock performance positively.