Foot Locker Inc. (NYSE:FL) is set to report FQ1 2015 earnings before the market opens on Friday, May 23rd. Foot Locker is the nation's largest retailer of athletic footwear. After stronger than expected reports earlier in the quarter from fellow athletic wear companies Nike (NYSE:NKE) and Under Armour (NYSE:UA), analysts are optimistic about the coming quarter from Foot Locker. Foot Locker has made a huge turnaround since Ken Hicks was named CEO back in 2009 and the stock has been red hot. Since lows in November of 2009 Foot Locker shares have rebounded from $3.19 to over $48.00. This quarter Wall Street is predicting a 15c per share gain in earnings compared to FQ1 of last year and a 9% increase in year over year revenue. Here's what investors are expecting from Foot Locker on Friday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Foot Locker to report $1.06 EPS and $1.784B revenue, while the current Estimize.com consensus from 7 Buy Side and Independent contributing analysts is $1.07 EPS and $1.764B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Foot Locker to edge past the Wall Street earnings consensus by 1c per share but miss the Street's revenue projection by $20 million.
Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Foot Locker's EPS and revenue 3 and 4 times respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.
More importantly it does a better job of representing the market's actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a larger differential than usual between revenue expectations from the two groups.
The distribution of earnings estimates published by analysts on the Estimize.com platform range from $1.04 to $1.08 per share and from $1.704B to $1.802B in revenues. This quarter we're seeing a wide range of estimates on Foot Locker, especially on revenue.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wide range of estimates signals less agreement in the market, which could mean greater volatility post earnings.
Throughout the quarter the Wall Street EPS consensus rose from $1.01 to $1.06, while the Estimize consensus remained flat at $1.07. Meanwhile, the Wall Street revenue consensus increased slightly from $1.779B to $1.784B, while the Estimize consensus fell from $1.784B to $1.764B. Timeliness is correlated with accuracy and the directionality of analyst revisions going into an earnings report are often a leading indicator. Here we see upward analyst revisions from Wall Street, but falling revenue expectations from the Estimize community.
The analyst with the highest estimate confidence rating this quarter is turbinecity, who projects $1.06 EPS and $1.783B in revenue. turbinecity was our Winter 2014 season winner and is ranked 2nd overall among over 4,500 contributing analysts. Over the past 2 years turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 60% and 54% of the time respectively throughout a massive 2,692 estimates.
Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, turbinecity expects Foot Locker to report roughly in-line with Wall Street coming up just short on sales.
Over the past 5 years Foot Locker has been an incredible comeback story. Shares have now climbed nearly 14x in value since the bottom in 2009. On Friday the buy-side as representing by the Estimzie community is expecting Foot Locker to report continued growth on both the top and bottom line and for Foot Locker to beat the Wall Street EPS consensus by 1c per share while coming up $20 million shy on sales.