Foot Locker (FL:NYS) Fundamental Valuation Report


Fundamental Valuation Report

Foot Locker(FL:NYS)

Consumer Cyclical:Footwear & Accessories

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$63.33 (USD) 08/04/2019

Weighted Valuation
$68.73 (USD)

Overall Rating
Undervalued by 8.5%

Valuation Models Analyst Consensus: $73.25 (USD)
(in order of importance) Comparables: $63.78 (USD)
Adjusted Book Value: $65.07 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Fairly valued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation

Company Overview (FL:NYS USD)

Price 63.33
Range 63.09 – 64.40
52 week 40.52 – 64.45
Open 63.75
Vol / Avg. 2.52M/2.8M
Mkt cap 7.15B
P/E 13.67
Div/yield 1.38/0.02
EPS 4.66
Shares 112.31M
Beta 0.75

Company Description

Foot Locker operates thousands of retail stores throughout the United States, Canada, Europe, Australia, and New Zealand. It also has one franchisee in the Middle East and one in South Korea, each of which operates multiple stores in those regions. The company mainly sells athletically inspired shoes and apparel. Foot Locker’s merchandise comes from only a few suppliers, with Nike providing the majority. Store names include Foot Locker, Champs, and Runners Point. The company also has an e-commerce business selling through Footlocker.com, Eastbay, and Final-Score.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for FL:NYS

Using a discounted cash flow model we generated an intrinsic value of $154.03 (USD) for FL:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

FL:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $154.03 1% 5% 1% 5%
WACC (or Ke) 7.15 $192.49 $128.29
Terminal Growth Rate 2.10 $130.80 $188.74
Tax Rate 0.24 $162.93 $145.13
Cash Flow 1,077,563,400 $147.28 $160.78
Capital Expenditures 1,000,000 $154.03 $154.02
Long Term Debt 129,000,000 $154.09 $153.97

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $63.78 (USD) for FL:NYS. We also generated a valuation of $97.67 (USD) using other metrics and comparables.
The comparable companies were Crocs (CROX:NAS), Deckers Outdoor (DECK:NYS), Steven Madden (SHOO:NAS), Skechers USA (SKX:NYS) and Wolverine World Wide (WWW:NYS).

Company FL:NYS End Date Value
Earnings/Share $4.66 (USD)
Book Value/Share $22.31 (USD)
Sales/Share $68.38 (USD)
Cash Flow/Share $6.37 (USD)
EBITDA/Share $7.77 (USD)
Price Based on Comps Adjustment Factor (%)
$86.76 (USD) -29.7
$116.88 (USD) -24.9
$112.50 (USD) -36.6
$114.68 (USD) -76.3
$100.14 (USD) -28.0
FL:NYS Ratios Used Average Values CROX:NAS DECK:NYS SHOO:NAS SKX:NYS WWW:NYS
13.00 PE Ratio 18.62 0.00 16.97 22.56 17.51 17.43
2.72 PB Ratio 5.24 12.56 4.21 3.61 2.55 3.26
0.89 PS Ratio 1.65 1.62 2.20 1.76 1.13 1.51
9.52 PCF Ratio 18.18 15.43 12.62 18.87 9.25 34.74
6.61 EV to EBITDA 12.89 19.77 10.46 13.48 7.89 12.86

Multiples

Using a multiples approach we generated a valuation of  $70.33 (USD) for FL:NYS

Company FL:NYS End Date Value
Earnings/Share $4.66 (USD)
Book Value/Share $22.31 (USD)
Sales/Share $68.38 (USD)
Cash Flow/Share $6.37 (USD)
EBITDA/Share $7.77 (USD)
Price Based on Comps Adjustment Factor
$78.26 (USD) 0
$67.56 (USD) 0
$75.63 (USD) 0
$72.54 (USD) 0
$57.68 (USD) 0
Ratios Ratio Average
PE Ratio 16.79
PB Ratio 3.03
PS Ratio 1.11
PCF Ratio 11.40
EV to EBITDA 7.42

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  FL:NYS for the last 10 years was  2.91

We ran the Adjusted Book Value for  FL:NYS and generated a book value of  $22.33 (USD)
By multiplying these we get an adjusted valuation of  $65.07 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for FL:NYS. The 4 analysts have a concensus valuation for FL:NYS for 2020 of $73.25 (USD).

FL:NYS Foot Locker

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 2 0 4.2000 Outperform 2019-4-5

Current Price: 63.33 USD

Analyst Consensus
USD Millions 2020 2021 2022
Mean EPS 5.15 5.70 6.23
# EPS Analysts 5 5 3
Mean Revenue 8,233.40 8,473.60 8,586.80
# Revenue Analysts 4 4 3
Mean Target Price 73.25
Mean Cash Flow 6.51 6.96 7.48
Mean EBITDA 944.50 1,003.60 1,055.40
Mean Net Income 559.60 599.20 637.20
Mean Debt Outstanding -347.90 -342.90 -389.70
Mean Tax Rate 27.50 27.20 27.50
Mean Growth Rate
Mean Capital Expenditure 275.30 244.00 246.60

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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