Finish Line Inc (FINL) Looks to Rebound With Full-Year Results: Foot Locker, Inc. (FL), NIKE, Inc. (NKE)

With The Finish Line Inc (NASDAQ:FINL)’s fourth quarter and full-year earnings release approaching on Mar. 28, shareholders will soon know if the mall-based specialty retailer will recover from a difficult third quarter. The company last reported earnings on Jan. 4 and missed guidance, admitting that a new e-commerce site, rolled out in November 2012, added to the company’s autumn and early winter woes.  Of course, Wall Street punished the shares on the news, with the stock declining more than 8% over a 24-hour period. Despite a rocky start to calendar 2013, The Finish Line Inc (NASDAQ:FINL) is still managing its ~650 storefronts effectively, with same-store sales increasing a healthy 3.6% quarter-over-quarter. Below are three reasons why March 2013 might be the time to build a long position in this specialty retailer.

As NIKE, Inc. (NYSE:NKE) goes, so goes Finish Line

An outstanding preview for Finish Line full-year results will be provided a week prior, on Mar. 21, when NIKE, Inc. (NYSE:NKE) releases third quarter earnings. As with its largest competitor, Foot Locker, Inc. (NYSE:FL), Nike provides the majority of products for Finish Line Inc (NASDAQ:FINL)s shelves. Overall, NIKE, Inc. (NYSE:NKE) has been delivering outstanding business results the last few quarters and saw top-line revenue surge +7% for the second quarter of 2012 versus the same quarter of 2011. As a retail and apparel brand bellwether, NIKE, Inc. (NYSE:NKE) should benefit from a reported 1.1% increase in February 2013 retail sales (which was a whopping 4.6% increase over February 2012), according to the U.S. Commerce Department. If Nike meets or beats earnings guidance on Mar. 21, don’t expect Finish Line to follow far behind on Mar. 28. Finish Line’s revised guidance for the fiscal year ending Mar. 2, is earnings per share between $1.47 and $1.51.

Finish Line may be trading at a discount

According to Capital IQ, Finish Line has a trailing P/E (ttm) of 12.29, a price/book (mrq) of 1.82, and a gross margin (ttm) of 0.40, all accomplished with zero debt. Finish Line Inc (NASDAQ:FINL)’s closest competitor in terms of market capitalization, Hibbett Sports, Inc. (NASDAQ:HIBB) appears to trade at a serious premium. Hibbett has a trailing P/E of 20.39, a price/book of 5.80, a gross margin of 0.37 and $714 thousand in debt. Foot Locker, Inc. (NYSE:FL), which has five times as many storefronts as Finish Line, has a comparable P/E of 12.55, a higher price/book of 2.13, a lesser gross margin of 0.33 and $133 million in debt. Despite displaying stronger operating discipline than its peers, Finish Line’s shares are trading just slightly above their 52-week low of $16.87. Overall, Finish Line Inc (NASDAQ:FINL) is trading at a discount to its historical valuation and peer retail comps—and its shares remain beaten down.