Will your portfolio survive without Foot (USA Stocks:FL)?
 | By Raphi Shpitalnik | Macroaxis Story |
Every rose has its thorn, and Foot Locker's stock is no exception when it comes to volatility. With a Market Facilitation Index of 0.18, the stock's price movements can be quite unpredictable, making it a rollercoaster ride for investors. Despite the turbulence, the analyst consensus leans towards a buy, suggesting potential growth opportunities. The stock's valuation real value sits at 19.42, while the analyst target price estimated value is 21.47, indicating room for appreciation. However, with a possible downside price of 15.49, caution is advised. Balancing these factors, Foot Locker could be a dynamic addition to your portfolio, but it's essential to buckle up for the ride. Over the next 90 days, Foot Locker is projected to deliver returns 6.82 times higher than the market average. However, it's also 6.82 times more volatile than its benchmark. The stock offers about 0.08 in potential returns for each unit of risk, while the Dow Jones Industrial Average is at approximately -0.01 per unit of risk. With many traditional investors steering clear of the specialty retail sector, it's worth examining Foot Locker's volatility trends. We'll explore whether this volatility might persist through June. Current risk factors could affect the stock's value, and we believe Foot Locker is overvalued at the moment, with its true value estimated to be around $19.42 per share.
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Reviewed by Michael Smolkin
Considering Foot Locker's stock from a volatility perspective, its coefficient of variation at 1.4K suggests a significant level of risk relative to its mean return, which could appeal to investors seeking dynamic opportunities. However, with a Sortino Ratio of just 0.1972, the stock's return per unit of downside risk is relatively low, indicating that while there might be potential for gains, the path could be quite bumpy, requiring a strong stomach for volatility.
Main Takeaways
Foot Locker has approximately $536 million in cash and generates $345 million in positive cash flow from operations, resulting in a cash-per-share (CPS) ratio of 3.71. The company scores 6 out of 100 in performance metrics. With a Beta of -0.15, Foot Locker experiences minimal volatility compared to the market. As market returns rise, Foot Locker's returns are expected to decrease at a slower pace, suggesting it may perform better during a bear market. To assess future returns, consider using Foot Locker's Sortino ratio, skewness, and price action indicator, along with the relationship between its potential upside and rate of daily change.Volatility is a rate at which the price of Foot Locker or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Foot Locker may increase or decrease. In other words, similar to Foot's beta indicator, it measures the risk of Foot Locker and helps estimate the fluctuations that may happen in a short period of time. So if prices of Foot Locker fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.
How important is Foot Locker's Liquidity
Foot Locker financial leverage refers to using borrowed capital as a funding source to finance Foot Locker ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Foot Locker financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Foot Locker's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Foot Locker's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Foot Locker's total debt and its cash.
Foot Locker Gross Profit
Foot Locker Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Foot Locker previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Foot Locker Gross Profit growth over the last 10 years. Please check Foot Locker's gross profit and other fundamental indicators for more details.
Foot Locker Volatility Drivers
Foot Locker unsystematic risk is unique to Foot Locker and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Foot Locker you can also buy Abercrombie Fitch. You can also mitigate this risk by investing in the consumer discretionary sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Foot Locker important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Foot Locker income statement and balance sheet. Here are more details about Foot volatility.Click cells to compare fundamentals
An Additional Perspective On Foot Locker
The latest price rise of Foot Locker could raise concerns from institutional investors as the firm is trading at a share price of 23.85 on very low momentum in volume. The company directors and management may have good odds in positioning the firm resources to exploit market volatility in June. The stock standard deviation of daily returns for 90 days investing horizon is currently 11.99. The very high volatility is mostly attributed to the latest market swings and not very good earnings reports from some of the Foot Locker partners.As Warren Buffett famously said, risk comes from not knowing what you're doing. Foot Locker (FL) presents a compelling case for those who understand its dynamics, with a beta of 1.41 indicating higher volatility compared to the market. Despite its modest net income of 12 million, the company maintains a solid current ratio of 1.54X, suggesting it can comfortably meet its short-term obligations. With a market capitalization of 2.28 billion and a price-to-earnings ratio of 8.88X, Foot Locker might be an intriguing addition for investors seeking value in the consumer cyclical sector. However, potential investors should be mindful of its probability of bankruptcy at 33.41%, which underscores the importance of thorough due diligence..
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