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Foot Locker, Inc. (NYSE:FL), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$25.31 at one point, and dropping to the lows of US$17.43. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Foot Locker's current trading price of US$17.43 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Foot Locker’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Foot Locker
What's The Opportunity In Foot Locker?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 7.20% above our intrinsic value, which means if you buy Foot Locker today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $16.26, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Foot Locker’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Foot Locker?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Foot Locker, it is expected to deliver a relatively unexciting top-line growth of 3.4% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? FL’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?