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Foot Locker (FL) Stock Jumps 2% Ahead of Q2 Earnings: What to Watch

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Shares of Foot Locker (FL - Free Report) popped just over 2% during regular trading hours Thursday in a sign that investors might expect good things from the sports retailer’s quarterly financial results. But the question is will FL continue a run of impressive retail earnings? Let’s take a look at Foot Locker’s latest quarterly projections ahead of its Q2 earnings release Friday morning to find out.

Walmart (WMT - Free Report) , Home Depot (HD - Free Report) , Nordstrom (JWN - Free Report) , and tons of other retailers posted strong quarterly financial results over the last few weeks. But with second-quarter earnings season winding down, there are few retailers left to report, which means more eyes will likely be on Foot Locker—especially since the sports apparel and footwear world has gone through big changes recently.

Foot Locker, like Dick’s Sporting Good (DKS - Free Report) and others, have been hurt by the shifting retail climate, with Nike (NKE - Free Report) , Adidas (ADDYY - Free Report) , and Under Armour (UAA - Free Report) all trying to transition to their own e-commerce platforms, and away from wholesale. But shares of FL have skyrocketed 68% since Foot Locker stock plummeted to a roughly five-year low in the fall of 2017.

Foot Locker Q2

Our current Zacks Consensus Estimate is calling for Foot Locker’s Q2 revenues to climb by roughly 3.7% to touch $1.76 billion. At the other end of the income statement, Foot Locker’s adjusted second-quarter earnings are expected to pop by nearly 13% to hit $0.70 per share. But, we still need to know how likely it is that Foot Locker tops our quarterly earnings estimate.

Luckily, we can turn to our exclusive Earnings ESP figure to help us find out. Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Foot Locker currently sports an earnings ESP of 0.26% and a Zacks Rank #3 (Hold). Therefore, our model suggests that the New York-based company could top our quarterly earnings estimate when it reports its Q2 results before the opening bell Friday. Plus, Foot Locker has topped our earnings estimates in the trailing three quarters.

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