Foot Locker Stock Eyes November Lows After Earnings

FL stock has been falling since early April

May 24, 2019 at 9:35 AM
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Foot Locker, Inc. (NYSE:FL) stock is trading down 13.2% ahead of the bell, set to open below its late-November lows. Earlier this morning, the athletic apparel retailer reported first-quarter adjusted earnings of $1.53 per share on $2.08 billion in revenue -- missing analysts' estimates. The company also said same-store sales rose a less-than-expected 4.6% over the three-month period.

Should today's pre-market downside hold through the close, it would mark FL stock's worst day since Aug. 18, 2017, when it plunged 27.9%. Plus, the equity is on track to slice through its 320-day moving average -- a trendline not breached on a daily closing basis since May 2018. More recently, the shares have shed nearly 19% from their early April high above $65, and settled last night at $52.83, just below their year-to-date breakeven mark.

Skepticism was building ahead of FL's earnings report. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.82 ranks in the 73rd annual percentile, meaning puts have been bought to open relative to calls at an accelerated pace in recent weeks.

The retail stock is heavily shorted, too. The 10.60 million shares currently dedicated to these bearish bets account for 9.5% of Foot Locker's available float, or 5.4 times the average daily pace of trading.

Analysts, meanwhile, have room to adjust their bullish outlooks. While eight of the 15 covering brokerages maintain a "strong buy" rating on FL stock, the average 12-month price target of $71 is a 34% premium to last night's close.

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