Foot Locker Investment Thesis

Click here for my Foot Locker Investment Thesis

Summary

Although the industry Foot Locker operates in is incredibly competitive, I believe the company is positioned strongly in a niche part of the industry that will continue to grow down the line. Other factors, such as excellent corporate governance structure and a history of meeting long-term objectives further add to my belief that Foot Locker is a competitive and attractive company.

Therefore, I believe Foot Locker is a strong buy with a price target of $96. I have no time horizon for this, but I believe the stock price will begin to trend upwards as the market begins to realize the high level of free cash flows and returns this company is able to generate. Further increase in dividend payouts or share repurchases will continue to support the price and help its convergence to intrinsic value.

Estimates of Value Low Base High
Bear case:  $   31.95  $   41.31  $   52.94
Base case:        87.22     105.79     133.55
Bull case:     110.47     135.96     167.96
Management’s guidance:        77.19        95.81     119.16
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