At 5-Year Lows, Is Foot Locker Stock a Buy?

At 5-Year Lows, Is Foot Locker Stock a Buy?

Foot Locker (NYSE: FL) shares recently approached 5-year lows after the footwear and apparel retailer's weak second quarter earnings report missed analyst estimates. Its revenue fell 4.4% annually to $1.7 billion, while comparable-store sales declined 6% and non-GAAP earnings dropped 34% to $0.62 per share -- $0.28 below expectations.

According to Wall Street, Foot Locker revenue will rise 1% this year, as earnings shed 5% on tougher competition and more discounting. However, the stock looks fundamentally cheap at just 8 times forward earnings, compared to the industry average P/E of 21 for footwear retailers. Should contrarian investors take a chance on this struggling stock?

Source: Getty Images.

Continue reading

Source: Fool.com