Foot Locker Increases Dividend Days Ahead Quarterly Report

Foot Locker said it increased its dividend by 50% in its recent press release

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Foot Locker, Inc. (NYSE:FL) is an American sportswear and footwear retailer. FL's portfolio of brands includes Foot Locker, Kids Foot Locker, Champs Sports, Eastbay, Footaction, and Sidestep. The sportswear company also operates approximately 3,000 retail stores in 27 countries across North America, Europe, Asia, Australia, and New Zealand, as well as websites and mobile apps. This afternoon, FL was last seen up 0.2% at $54.18.

Foot Locker stock has just about doubled in price since it hit its nine-year low of $26.90 last August. Additionally, shares of FL have grown 34% year-to-date. However, Foot Locker stock is down 19% since reaching a two-year high of $66.71 in May. Aiding the stock in recent weeks has been the 180-day moving average, which the shares pulled back to earlier this month.

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On Aug. 16, Foot Locker declared a quarterly cash dividend of $0.30 per share of common stock, which is an increase of $0.10 per share, or 50%. This cash dividend will be payable on Oct. 29 to shareholders of record on Oct.15. This increase brings Foot Locker's forward dividend up to $1.20 and FL's dividend yield up to 2.22%.

Foot Locker plans to report second quarter of 2021 financial results before the open on Friday, Aug. 20. In recent history, Foot Locker has beat earnings expectations on all four of its most recent earnings reports. For the fiscal third quarter of 2020, FL beat analysts’ estimates by a margin of $0.02, reporting an EPS of $0.71. For Q4 of 2020, Foot Locker's EPS increased to $1.21, beating expectations by a margin of $0.58. For Q1 of 2021, FL posted another increase in earnings, rising to $1.55 per share and beating estimates by a margin of $0.20. For Q2 of 2021, Foot Locker reported an EPS of $1.96 and beat expectations by a margin of $0.87. Analysts have the company’s EPS coming in at $1.00 for their upcoming fiscal third-quarter report.

From a fundamental perspective, Foot Locker stock still has decent upside potential, even after its huge upward move over the past year. FL currently trades at an extremely attractive price-earnings ratio of 8.94. In general, FL appears to have made a full recovery from the pandemic’s losses. However, Foot Locker stock is not anticipated to maintain as high of a growth rate, with analysts placing an 11.05 forward price-earnings ratio on FL. Nonetheless, Foot Locker stock remains a strong value and dividend play.

Meanwhile shorts have been hitting FL in droves, short interest up 9.5% in the last two reporting periods. The 4.57 million shares sold short make up 5.1% of the equity's available float, and would take short sellers just over three days to buy back these bearish bets.

The options pits lean bullish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FL's 10-day put/call volume ratio of 13.36 stands higher than 97% of readings from the past year. Echoing this is the stock's Schaeffer's put/call volume ratio (SOIR) of 0.44, which sits higher than 21% of readings in its annual range. This means traders have rarely been more call-biased toward Foot Locker stock.

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