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Are Investors Undervaluing Foot Locker (FL) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Foot Locker (FL - Free Report) . FL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.40, which compares to its industry's average of 14.31. Over the past 52 weeks, FL's Forward P/E has been as high as 12.85 and as low as 9.08, with a median of 10.75.

We also note that FL holds a PEG ratio of 1.24. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FL's industry currently sports an average PEG of 1.28. Within the past year, FL's PEG has been as high as 2.28 and as low as 1.23, with a median of 1.57.

Another notable valuation metric for FL is its P/B ratio of 2.68. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. FL's current P/B looks attractive when compared to its industry's average P/B of 3.60. Over the past year, FL's P/B has been as high as 2.85 and as low as 1.93, with a median of 2.38.

These are just a handful of the figures considered in Foot Locker's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FL is an impressive value stock right now.


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