NEW YORK (TheStreet) -- Finish Line (FINL) shares are up 1.5% to $26.14 in early-market trading after analysts at Piper Jaffray upgraded the company's stock to "overweight" from "neutral" on Thursday, while also raising its price target to $31 from its previous price target of $28.
The new price target represents a potential upside of 20.4% over the company's previous closing price of $25.74.
The firm made a valuation call and believes that the shoe and athletic apparel retailer can post earnings growth in the mid teens over the next two years following analyst conversations with the company's management.
TheStreet Ratings team rates FINISH LINE INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FINISH LINE INC (FINL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FINL's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- FINL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
- FINISH LINE INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FINISH LINE INC increased its bottom line by earning $1.56 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.56).
- 35.31% is the gross profit margin for FINISH LINE INC which we consider to be strong. Regardless of FINL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.60% trails the industry average.
- You can view the full analysis from the report here: FINL Ratings Report