4. Foot Locker, Inc. (NYSE:FL)
Number of Hedge Fund Holders: 21
Foot Locker, Inc. (NYSE:FL) is a New York-based company that operates as an athletic footwear and apparel retailer. David Harding’s Winton Capital Management added Foot Locker, Inc. (NYSE:FL) to its Q1 portfolio by buying 134,870 shares worth $4 million. The company’s Q1 results came in below Street consensus estimates.
On May 18, Foot Locker, Inc. (NYSE:FL) declared a $0.40 per share quarterly dividend, in line with previous. The dividend is payable on July 29, to shareholders of record on July 15. The company delivers a dividend yield of 4.81% as of May 30.
Deutsche Bank analyst Gabriella Carbone on May 23 raised the price target on Foot Locker, Inc. (NYSE:FL) to $32 from $30 and reiterated a Hold rating on the shares. The company reported a “solid” quarter that outperformed the buy-side expectations and lifted its full-year guidance to the upper end of the previously provided range for both comps and earnings, the analyst told investors.
According to Insider Monkey’s Q1 data, 21 hedge funds were bullish on Foot Locker, Inc. (NYSE:FL), compared to 27 funds in the earlier quarter. Jim Simons’ Renaissance Technologies held the largest stake in the company, comprising 913,900 shares worth $27.10 million.
Here is what Miller Value Partners Deep Value Strategy has to say about Foot Locker, Inc. (NYSE:FL) in its Q1 2022 investor letter:
“Finally, Foot Locker (NYSE:FL) came under significant pressure during the quarter, with the stock down more than 50% from its highs and valuation not far from early 2020 lows. Nike continues to place a greater focus on their Direct-to-Consumer business, which will decrease their contribution to Foot Locker’s total sales, retreating to historical averages of 50% by 2023. While a near-term headwind to sales, management plans to offset the lost business by expanding distribution to other leading brands, rolling out larger neighborhood free-standing stores, and expanding two new growth banners (WSS & Atmos). WSS stores will provide an off-mall presence and focus on the rapidly growing and underserved Hispanic market. Atmos will provide Foot Locker with the ability to expand into the Japan and Asia sneaker market with their digitally led business model. These new growth concepts have a combined potential to add more than $1B in sales by 2024. The company’s balance sheet remains very strong with $800M in cash and management is increasing returns to shareholders through raising the dividend by 40% and announcing a $1.2B share buyback (more than 40% of the float at current share prices). With the next 12 to 18 months as a transition period for the company, the share price weakness provides attractive reward/risk investment potential, near 3x Enterprise Value/Earnings Before Income, Taxes, Depreciation, and Amortization (EV/EBITDA) and close to a 30% normalized free cash flow yield.”
