NEW YORK (TheStreet) -- Foot Locker (FL) - Get Report stock closed higher by 4.12% to $66.65 on Tuesday, after the athletic footwear and apparel retailer was upgraded to "neutral" from "underperform" at Bank of America/Merrill Lynch, according to Trifecta Stocks.
The firm also increased its price target to $70 from $60 as analysts see "strong momentum in the 'casual athletic' footwear" category.
Foot Locker's same store sales growth is expected to be in the mid-single digit range through the 2017 fiscal year, Bank of America/Merrill Lynch said in an analysts note this morning, The Fly reports.
In fiscal 2015, same store sales have increased by 7.8% in the first quarter, 9.6% in the second quarter and 8.7% in the third quarter.
Shares of Foot Locker also gained today in anticipation of an earnings beat from top supplier Nike (NKE), which will report its fiscal 2016 second quarter financial results this afternoon.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate FOOT LOCKER INC as a Buy with a ratings score of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, good cash flow from operations and notable return on equity. We feel its 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- FL's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Net operating cash flow has slightly increased to $80.00 million or 3.89% when compared to the same quarter last year. Despite an increase in cash flow, FOOT LOCKER INC's cash flow growth rate is still lower than the industry average growth rate of 18.99%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, FOOT LOCKER INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: FL