Why Foot Locker Stock Raced Higher Today
Shares of shoe retailer Foot Locker (NYSE: FL) raced higher on Thursday after the company reported financial results for the first quarter of 2024. And while results weren't necessarily impressive, they weren't as bad as some reports in recent quarters. That's really all this stock needs right now and it's why Foot Locker stock was up a whopping 24% as of 11:10 a.m. ET.
Allow me to set the stage: Investors have really low expectations for Foot Locker right now. Generally speaking, a price-to-sales (P/S) valuation of 1 is cheap and it's where Foot Locker stock traded 10 years ago. Fast forward to 2024, and shares of the shoe retailer have hovered around a P/S ratio of 0.2 -- 80% cheaper than its valuation a decade ago.
As shoe companies have increasingly sold directly to consumers, Foot Locker has had to lower prices to stay in the picture. But lowering prices lowers profit margins, which is why the stock has trended down in recent years.
Source Fool.com
