Foot Locker (FL) to Report Fourth Quarter Revenue: Factors to Consider

Foot Locker, Inc. FL is expected to see revenue growth from the figure reported a year ago when it released fourth quarter fiscal 2021 results on Feb. 25, before market open. Zacks’ consensus estimate for quarterly revenue is currently pegged at $2,314 million, indicating growth of 5.7% from the figure reported a year ago.

However, the net result is likely to decrease from the number reported for the prior year period. Zacks’ consensus estimate for quarterly earnings currently stands at $1.45, suggesting a decline of 6.4% from the year-ago quarter count. The consensus mark is down a penny in the past seven days. A look at the performance of this sports footwear and apparel retailer over the past four quarters shows that it has recorded an average surprise of 58.1%.

For fiscal 2021, the revenue consensus mark is currently pegged at $8.9 billion, suggesting growth of 18.2% over last fiscal year. The Zacks consensus estimate for earnings currently stands at $7.55, suggesting a strong increase from the $2.81 earned in the prior year.

Key Factors to Note

Foot Locker’s fiscal fourth quarter sales likely benefited from strong consumer demand and product categories like apparel and accessories. FL’s efforts to boost digital capabilities and strengthen assortments should continue to bear fruit. Management has been trying for some time to improve performance through operational and financial initiatives.

Foot Locker regularly improves its omnichannel experience by adding features and activating a Shop My Store feature on its website. Its direct-to-consumer channels have been showing immense strength for some time. FL is also progressing well with its FLX membership program. All of the above factors, coupled with gains from its strategic deals, including partnerships and acquisitions, are expected to have bolstered FL’s revenue in the reporting quarter.

During the fiscal third quarter earnings call, management indicated that fiscal 2021 results should benefit from the acquisitions of WSS and atmos. For the full year, Foot Locker forecast sales growth in the teens, with comp sales in the mid-teens. Management expects gross margin to increase by 540 to 550 basis points (bps) year over year in a rational promotional environment. He expected G&A leverage of 40 to 50 basis points year over year. FL expected adjusted earnings of $7.53 to $7.60 per share for the year.

However, management had previously warned of industry-wide supply chain headwinds. This includes port congestion and factory closures, which may have dampened fiscal fourth quarter performance. He expects supply chain constraints to persist through the fourth fiscal quarter. Higher shipping costs are additional deterrents.

What the Zacks Model Reveals

Our proven model predicts an earnings beat for Foot Locker during this reporting cycle. The combination of a positive earnings ESP and a Zacks rank of #1 (strong buy), 2 (buy), or 3 (hold) increases the chance of an earnings beat, which is the case here. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

Foot Locker currently has a Zacks #3 ranking and +3.51% ESP gain.

More actions with a favorable combination

Here are a few other companies in the same industry that are worth considering, as our model shows they also have the right combination of elements to beat on earnings this season:

Casey General Stores CASY currently has an Earnings ESP of +15.39% and a Zacks Rank of 3. CASY is expected to record an increase in revenue when it reports its third quarter fiscal 2022 results. The estimate Zacks consensus for Casey’s General Stores revenue is set at $3,081 million, indicating a 53.2% increase over the figure reported in the prior year quarter. You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks’ consensus estimate for Casey’s General Stores quarterly earnings is pegged at $1.43 per share, suggesting a 37.5% improvement over the figure reported a year ago. CASY has posted a 20.1% profit beat, on average, over the past four quarters.

American Eagle Outfitters AEO currently has a +2.07% Earnings ESP and is ranked #3 out of Zacks. AEO will likely see a decline in net income when it reports fourth quarter fiscal 2021 numbers. Zacks’ consensus estimate for quarterly earnings per share of 36 cents suggests a 7.7% drop from to the figure published a year ago.

American Eagle Outfitters revenue is expected to increase from the revenue reported in the prior year quarter. Zacks’ consensus estimate for quarterly revenue is pegged at $1,532 million, indicating an 18.4% improvement over the figure reported in the year-ago quarter. AEO has a last four quarter earnings surprise of 12.7% on average.

Costco COST currently has a +0.75% Earnings ESP and Zacks Rank #3. COST will likely see an increase in net income when it releases second-quarter fiscal 2022 numbers. Zacks’ consensus estimate for quarterly earnings per share of $2.67 suggests a 24.8% increase over compared to the figure declared a year ago.

Costco’s revenue is expected to increase from the figure reported in the prior quarter. Zacks’ consensus estimate for quarterly revenue is pegged at $51.1 billion, suggesting 14% growth from the reported figure for the year-ago quarter. COST has an earnings surprise for the last four quarters of 8.3% on average.

Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.

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American Eagle Outfitters, Inc. (AEO): Free Inventory Analysis Report

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