I wrote in my first article about foot locker:
Earnings per share in 2020 would be 7,19$ – I guess a stock of that quality could be sold for 15 times earnings. So that would be 107.85$ in year 2020. The price today is around 62$. That is a pretty nice upside of around 70% – not bad.
In my “buy” article about them I wrote:
Some more fun with numbers:
I looked at their debt situation to define a discount rate: Morningstar Debt/Bonds overview FL
They have a year 2022 – 8.5% bond outstanding which is currently trading at 4.93% yield to maturity. I assumed a 6.5% discount rate for the equity.
I calculated with the assumed sell price for the year 2020 which I see at 107,85$ (of course things could turn out quite different). I discounted this price with a rate of 6,5% and came up with a “net present value” of about 82$. (note: this calculation does not include or consider dividends).
Discount Rate 6,5% 2020 107,85 2019 100,83 2018 94,28 2017 88,15 2016 82,42 NPV 82,42 Current price 63,2 Upside 30%
Considering the stock is now somewhere around 60 US$, this produces a 30% upside. So I bought a small amount.
Lets summarise this:
Foot Locker was at 63.0 USD when I bought it
Foot locker is now at 73.68 USD
I estimated the y2020 value of FL 107.85 USD (NPV of that was 82,42 for me)
I thought a PE of 15 would be fair
What happend at FL in the mean time:
The 3Q2016 reads like this:
Net income for the Company’s third quarter ended October 29, 2016 was $ 157million, or $1.17 per share, compared with net income of $80 million, or $0.57 per share in the same period of 2015.
Third quarter comparable – store sales increased 4.7percent.
Year-To-Date ResultsNet income for the Company’s firstninemonths of the year increased to $475million, or $3.50per share, compared to net income of $383million, or $2.71$ per share, for the corresponding period in 2015.
The Company’s cash totaled $865 million, while the debt on its balance sheet was $128 million.
The Company spent $76.3 million to repurchase 1.15 million shares during the quarterand paid a quarterly dividend of $0.275.
During the third quarter, the Company opened 21 new stores, remodeled or relocated 40 stores, and closed 28 stores.
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