Wall Street Week Ahead Earnings: Caesars Entertainment, Home Depot, Lowe’s and Moderna in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion could hit the stock market hard over the coming months. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of February 21

Monday (February 21)

The New York Stock Exchange and NASDAQ will all be closed on Monday, February 21 for President’s Day.

Tuesday (February 22)

IN THE SPOTLIGHT: CAESARS ENTERTAINMENT, HOME DEPOT

CAESARS: The largest casino-entertainment Company in the U.S. company is expected to report its fourth-quarter loss of $-0.71 per share, up over 58%, better compared to a loss of $-1.7 per share seen in the same period a year ago. The Las Vegas-based company would post revenue growth of over 77% to $2.58 billion.

Caesars Entertainment (CZR) is currently trading at below its historical NTM multiple on 2023e EBITDAR, despite our expectation of >1,000bps higher core casino margins and faster growth. We believe regional casino markets (55% of mix) have structural tailwinds from customers acquired post-COVID and sports betting legalization,” noted Thomas Allen, equity analyst at Morgan Stanley.

“We expect CZR to improve its sports betting / iGaming market share in coming qtrs, a key driver to Gaming stocks in recent years. High leverage now (7.5x at YE21) but significant FCF and a planned Vegas asset should drive leverage to ~5x by YE22, opening up a broader investor base.”

HOME DEPOT: The largest home improvement retailer in the United States is expected to report its fourth-quarter earnings of $3.22 per share, which represents year-over-year growth of over 17% from $2.74 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of over 7% to $34.6 billion. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“We are Overweight Home Depot (HD) given its best-in-class nature and structural housing tailwinds beyond N-T disruption from COVID-19. The stock seems attractively valued in the context of a potential 2021/2022 economic/housing boom,” noted Simeon Gutman, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 22

TICKER COMPANY EPS FORECAST
CNP CenterPoint Energy $0.33
HR Healthcare Realty Trust $0.44
HD Home Depot $3.22
M Macy’s $1.91
MDT Medtronic $1.38
PANW Palo Alto Networks $-0.42
TOL Toll Brothers $1.26

 

Wednesday (February 23)

IN THE SPOTLIGHT: LOWE’S

Home improvement retailer Lowe’s is expected to report its fourth-quarter earnings of $1.69 per share, which represents year-over-year growth of over 27% from $1.33 per share seen in the same period a year ago. The company that distributes building materials and supplies through stores in the United States would post revenue growth of over 2% to $20.82 billion.

“We view Lowe’s (LOW) favourably given its longer-term transformation opportunity and structural industry tailwinds, with substantial near-term uplifts from COVID-19 spending shifts that likely translate to longer-term sales retention,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Assuming a healthy underlying housing backdrop, we think comps can accelerate longer-term from stronger sales/sq ft trends, driven by e-comm accelerating, better in-stocks, product refreshes/exclusive launches, greater traction with Pro initiatives, and removing friction from the customer shopping experience. Combined with productivity initiatives, this should enable EBIT margin expansion going forward.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 23

TICKER COMPANY EPS FORECAST
BBWI Bath & Body Works $2.25
BCS Barclays $0.29
EBAY eBay $0.82
HEI Heico $0.57
NTAP NetApp $1.07

 

Thursday (February 24)

IN THE SPOTLIGHT: MODERNA

Moderna, the biotech company focused on drug discovery, is expected to report its fourth-quarter earnings of $8.62 per share, which represents year-over-year growth of over 1,340% from a loss of -$0.69 per share seen in the same period a year ago.

The Massachusetts-based biotechnology company would post revenue growth of 1,075% to around $6.71 billion.

“We are Equal-weight Moderna. While we believe there is long-term upside for Moderna, we believe the significant valuation increase associated with the success of the COVID-19 vaccine limits the near-term upside,” noted Matthew Harrison, equity analyst at Morgan Stanley.

“The company has taken an industrialized approach to developing mRNA based therapeutics and has rapidly generated a broad pipeline of 21 programs, 11 of which have entered clinical development. We believe Moderna’s mRNA drug development platform is more diversified and scalable compared with competitors, and is validated through broad partnerships with Merck and AstraZeneca. We see vaccines and rare diseases as the key valuation drivers of the company.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 24

TICKER COMPANY EPS FORECAST
ADSK Autodesk $0.89
AXON Axon Enterprise $-0.07
SQ Block $-0.06
CVNA Carvana $-0.76
DELL Dell Technologies $1.94
DISCA Discovery $0.84
GCI Gannett $-0.03
NTES NetEase $0.82
NKLA Nikola $-0.46
VMW VMware $1.44
ZS Zscaler $-0.57

 

Friday (February 25)

TICKER COMPANY EPS FORECAST
AES AES Corp. $0.46
CNK Cinemark Holdings $-0.16
DSX Diana Shipping $0.30
SSP E.W. Scripps $0.46
FL Foot Locker $1.46

 

Morgan Stanley Slashed Foot Locker’s Target Price to $47 on More Cautious Outlook

Morgan Stanley slashed their base stock price forecast on Foot Locker to $47 from $66 on a more cautious outlook, reiterating an “Equal-weight” rating on the retailer of shoes and apparel.

In November, Foot Locker reported quarterly earnings of $1.93 per share in the third quarter, beating the market expectations of $1.36 per share. The New York-based retailer posted revenues of $2.19 billion for the quarter ended October 2021. That also topped analysts’ expectations.

“We lower our Foot Locker (FL) price target to $47 on a more cautious S-T outlook & subsequently revised M-T forecast & L-T DCF assumptions. Recent store checks suggest FL is low on Nike (NKE) inventory, which we expect to continue through at least 1Q22 given NKE does not expect to be fully back in stock until May or June 2022. Given this dynamic, we trim our 4Q21 & 2022 revenue & GM forecasts accordingly against consistent SG&A spend, which lowers our respective EPS estimates by 23% & 28%, respectively,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

“We then refine our M-T forecast for the revised 2021e & 2022e base years, cutting EPS by 35% on average in 2023-2026e. This accounts for the majority of our price target change, though we also 1) lower our terminal EBIT margin assumption across cases (to 5.0%, 10.0%, & 3.0% from 6.0%, 10.5%, & 5.0% prior), in-line with the lower M-T forecasts, & 2) update our WACC inputs for current market conditions. All in, our price target, bull case, and bear case decline to $47, $115, & $33 from $66, $135, & $44 prior. Our revised price target equates to 4x 2022e EV/EBITDA, slightly below FL’s 5x pre-Covid average.”

Morgan Stanley gave the stock price forecast of $115 under the bull scenario and $31 under the worst-case scenario. Other equity analysts also updated their stock price outlook. Cowen and company cut the target price to $53 from $62. Berenberg lowered the price target to $73 from $81. Deutsche Bank slashed the price objective to $72 from $75.

Nine analysts who offered stock ratings for Foot Locker in the last three months forecast the average price in 12 months of $158.57 with a high forecast of $170.00 and a low forecast of $140.00.

The average price target represents a 25.54% change from the last price of $126.31. Of those nine analysts, seven rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

On Thursday, Foot Locker shares closed 0.80% lower at $43.96. The stock rose over 8% so far this year.

“Four factors cloud our ability to assess Foot Locker’s (FL) earnings growth trajectory, leaving it a “show-me” story: 1) pre-Covid performance degradation & seemingly unachievable LT targets, 2) its large, mall-based footprint against declining traffic & a limited store growth oppty (a sales & GM headwind on B&O deleverage), 3) unclear cost base rationalization plans against likely flat to +LSD post-Covid & WSS/atmos acquisition avg. revenue/comp growth (recall FL requires +MSD comp for SG&A lev.), & 4) the GM impact of mix shift to eComm,” Morgan Stanley’s Greenberger added.

“We like FL’s recent use of cash (dividend raise, share repo, WSS/atmos acquisition) & real estate rationalization plans. We anticipate performance giveback in 2022 onwards.”

Technical analysis suggests it is good time to sell as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.

What Fuels The Stock Market Now?

An outstanding earnings season and signs that economic activity are picking back up are clashing with unrelenting inflation, difficulty finding more labor, and continued supply chain logjams.

Inflation

Most insiders believe inflation has further to climb, though the consensus right now is calling for a peak around the beginning of Q2 next year. With big shopping holidays in the U.S. coming up, followed closely by Chinese New Year at the beginning of February 2022, shipping and transportation logjams aren’t expected to find much relief in the near-term.

Meaning inflation pressures will likely continue. How far inflation will climb as the severe supply chain dislocations drag on is a huge unknown. Some Wall street investors are concerned that the Fed might feel compelled to end its asset purchases and hike rates much sooner than expected if monthly inflation keeps accelerating.

What might be even more worrisome is the fear that some of these price increases could be more permanent in nature, so how much overall inflation will pull back in the long run is starting to become a bigger talking point.

Demand and supply chain

Supply chain insiders warn that many companies are front-loading inventories in an effort to avoid running out of critical materials, which could bite in the long run if demand suddenly drops off. A lot of manufacturers have also increased production capacity for products that currently face shortages. The risk is that once back orders are filled and demand retreats, stockpiling and excess production could result in an oversupply situation in some areas, along with much lower profits and total revenues.

Another worry right now is that demand starts to retreats due to the current inflationary environment especially with everyday items like food and gasoline costing substantially more. That has investors anxious to see the latest Consumer Sentiment read being released today which is expected to edge higher vs. last month.

Investors are closing tracking the inflation expectation gauges in the report as typically the higher those climb, the more consumers tend to pull back on spending.

Data to watch next week

Looking towards next week, the economic data flow picks up with key releases including Empire State Manufacturing on Monday; Retail Sales, Import/Export Prices, Industrial Production, Business Inventories, and the NAHB Housing Market Index on Tuesday; Housing Starts and Building Permits on Wednesday; and the Philadelphia Fed Index on Thursday.

On the earnings front, Q3 reporting is just about wrapped up with companies in the S&P 500 index reporting revenue growth of more than +17%, the second highest on record behind only Q2 2021’s growth of over +25%, according to FactSet. Earnings themselves are on track to exceed +40%. AstraZeneca is today’s earnings highlight. Earnings next week include several big retailers which will provide some more clues as to how consumer demand is trending as well as updates on supply chain struggles. Investors are also keen to hear how holiday hiring is going.

Key earnings reports next week will include Advanced Auto Parts, Lucid, Tyson, and Warner Music on Monday; Home Depot and Walmart on Tuesday; Bath & Body Works, Cisco, Lowe’s, NVIDIA, Target, TJX, and Victoria’s Secret on Wednesday; Alibaba, Applied Materials, Intuit, Kohl’s, Macy’s, Palo Alto Networks, Ross Stores, and Williams Sonoma on Thursday; and The Buckle and Foot Locker on Friday.

Checking in on the geopolitical front, the U.S. is warning that Russia may be planning a full-scale invasion of Ukraine. U.S. officials say they’ve briefed their EU counterparts about concerns over a possible military operation, citing a buildup of Russian troops along the Ukraine border. Tensions are boiling still in Belarus and Russia is fanning the flames on that front as well.

SP500 commentary

ES ##-## (Daily) 2021_11_14 (1_49_54 AM)

The bearish accumulation divergence played very well last week. Moreover, the Advance Decline Line is weaker than the price is. It is also a negative factor in the short term. Potentially SP500 started the formation of the bull flag. Finding support at lower levels would be a great buying point with a target of 4800.

The major economic indicators are still bullish despite rising inflation. 4500 level is a psychological level bears will target if 4600 fails. Current levels can be considered only for intraday trading. At the same time, lower levels are needed to get a good risk/reward ratio for swing traders.

For a look at all of today’s economic events, check out our economic calendar.

Earnings Week Ahead: Advance Auto Parts, Home Depot, Nvidia and Ross Stores in Focus

Earnings Calendar For The Week Of November 15

Monday (November 15)

IN THE SPOTLIGHT: ADVANCE AUTO PARTS

The leading automotive aftermarket parts retailer Advance Auto Parts is expected to report its third-quarter earnings of $2.87 per share, which represents year-over-year growth of over 2% from $2.81 per share seen in the same period a year ago.

The Raleigh, North Carolina-based company would post revenue growth of nearly 2% to $2.6 billion up from $2.54 billion registered a year earlier. The company has beaten earnings per share (EPS) estimates three times in the last four quarters.

Advance Auto Parts (AAP) operates in a defensive (recession-resistant) category and has one of the largest long-term EBIT margin expansion opportunities in our coverage (we estimate 300-400 bps over time). COVID-19 slowed parts of AAP’s transformation but gross and EBIT margin upside from internal initiatives is still expected beginning in 2021,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Significant and improving FCF generation plus share repurchases likely to enhance EPS growth. We think the combination of a defensive category, AAP’s progress generating stable top-line growth, and significant margin upside all make for an upside case. Slowing topline momentum and associated risk to margin trajectory balance the risk/reward skew.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 15

Ticker Company EPS Forecast
AAP Advance Auto Parts $2.87
JJSF J&J Snack Foods $1.28
CMP Compass Minerals International $0.62

Tuesday (November 16)

IN THE SPOTLIGHT: HOME DEPOT

The largest home improvement retailer in the United States, Home Depot, is expected to report its third-quarter earnings of $3.39 per share, which represents year-over-year growth of about 7% from $3.18 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of over 4% to $34.942 billion from $33.54 billion a year earlier. In the last two years, the company has beaten earnings per share (EPS) estimates in most of the quarters with a surprise of over 5%.

Home Depot shares have gained nearly 40% so far this year. The stock closed 1.36% higher at $372.63 on Friday. Home Depot’s better-than-expected results, which will be announced on Nov 16, could help the stock hit new all-time highs.

“Shares of Home Depot have risen and outpaced the industry year to date. The company boasts a robust surprise trend with the fifth straight quarter of earnings and sales beat in second-quarter fiscal 2021. Results gained from continued demand for home improvement projects, the robust housing market and ongoing investments. The company is effectively adapting to the demand for renovations and construction activities, driven by prudent investments,” noted analysts at ZACKS Research.

“It is gaining from growth in Pro and DIY customer categories as well as digital momentum. However, in the second quarter, the company witnessed year-over-year moderation in its comparable-store sales growth. This was due to the lapping of the high demand environment for home-improvement projects seen last year. Soft gross margin, stemming from increased penetration of lumber, has also been a drag.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 16

Ticker Company EPS Forecast
ICP Intermediate Capital £32.70
HSV Homeserve £6.60
ARMK Aramark $0.19
HD Home Depot $3.35
DLB Dolby Laboratories $0.35
LAND Land Securities £18.78
IMB Imperial Brands PLC £138.10

Wednesday (November 17)

IN THE SPOTLIGHT: NVIDIA

The Santa Clara, California- based multinational technology company, Nvidia, is expected to report its third-quarter earnings of $1.11 per share, which represents a year-over-year decline of over 60% from $2.91 per share seen in the same period a year ago.

The company, which designs graphics processing units for the gaming and professional markets, as well as system on a chip unit for the mobile computing and automotive market would post year-over-year revenue growth of over 40% to $6.8 billion.

According to Oppenheimer analyst Rick Schafer, Nvidia will report above-consensus October quarter results, lifting its price target to $350 from $235 and rating the company “outperform”.

“Supply constraints continue to weigh on the group, though we see Nvidia (NVDA), a top semi-supplier, as better positioned to secure capacity. The company’s leading soup-to-nuts software/hardware platform solidifies its AI accelerator dominance,” Oppenheimer analyst Rick Schafer wrote in his report, reported by Reuters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 17

Ticker Company EPS Forecast
BLND British Land Company £8.75
SGE The Sage Group £11.11
LOW Lowe’s Companies $2.33
CPRT Copart $0.99
NVDA Nvidia $1.11
CPA Copa -$0.19
KLIC Kulicke And Soffa Industries $2.07
TTEK Tetra Tech $1.00
HI Hillenbrand $0.91
SSE SSE £11.80

Thursday (November 18)

IN THE SPOTLIGHT: ROSS STORES

The second-largest off-price retailer in the U.S., Ross Stores, is expected to report its third-quarter earnings of $0.79 per share, which represents a year-over-year decline of over 24% from $1.02 per share seen in the same period a year ago.

The U.S. home fashion chain would post year-over-year revenue growth of nearly 16% to $4.4 billion. The company has beaten earnings per share (EPS) estimates three times in the last four quarters.

“Market share capture from competitor bankruptcies & store closures, favourable customer fundamentals, and high exposure to Hispanics, the fastest-growing US population segment, support 6-8% long-term revenue growth and 10%+ annual EPS. Upward EPS revisions appear an ongoing positive share price catalyst. Profit flow-through is magnified when comps exceed the 1-2% plan in a typical year,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

“The ‘everyday value’ proposition fosters comp outperformance, while recessions accelerate customer acquisition. Low average selling prices ($8-10/unit) and narrow gross margin render selling online unprofitable at this price point.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 18

Ticker Company EPS Forecast
NG National Grid £15.70
HLMA Halma £21.19
RMG Royal Mail -£6.30
NJR New Jersey Resources $0.08
KSS Kohl’s $0.69
HP Helmerich & Payne -$0.50
MMS Maximus $0.87
BJ BJs Wholesale Club Holdings Inc $0.79
M Macy’s $0.29
BERY Berry Plastics $1.53
NUAN Nuance Communications $0.20
BRC Brady $0.76
ROST Ross Stores $0.79
INTU Intuit $0.97
FTCH Farfetch -$0.24
ESE ESCO Technologies $0.78

Friday (November 19)

Ticker Company EPS Forecast
BKE Buckle $0.80
FL Foot Locker $1.34

 

Stock Index Futures Play It Cautious Heading Into Monday

After a rocky week in the markets, investors are hoping to turn the ship around. On Friday, the three major indices raced ahead. It was not enough to undo the recent damage, however.

The Dow Jones Industrial Average added more than 200 points to sit atop the 35K level once again, while the S&P 500 gained nearly 1% and the Nasdaq advanced slightly more than 1%. Despite Friday’s gains, the Dow, S&P 500 and tech-heavy Nasdaq were lower on the week. Market volatility is likely to persist.

Investors were faced with the reality that the Federal Reserve will likely begin tapering its bond-buying program sooner than later, not to mention the looming threat of the delta variant, all of which weighed on stocks. Geopolitical uncertainties tied to the unraveling of Afghanistan have also pressured stocks.

The WTI crude oil price also took a hit, falling close to 9% last week to just over USD 62 per barrel. In crypto land, the bitcoin price rallied and inched closer to the psychologically important USD 50K level over the weekend.

Stock index futures played it cautiously ahead of Monday’s open and were mostly unchanged from Friday’s session.

Stocks to Watch

  • Investors have been rewarding shares of Tesla. The EV maker held an artificial intelligence day last week and revealed plans for an AI-fueled humanoid robot. Tesla shares were up 1% on Friday.
  • Nvidia’s plan to acquire U.K.-based chip company ARM in a USD 40 billion deal is facing regulatory scrutiny. Nonetheless, shares of Nvidia closed higher by 5% on Friday.
  • Shares of athletic retailer Foot Locker advanced 5% on Friday on the heels of stronger than expected earnings and a robust outlook for the rest of the year.
  • Oil stocks including the likes of ExxonMobil will be in focus after the oil price weakness.

Look Ahead

On Monday, new and existing home sales data will be released for the month of July. Wells Fargo economists predict new home sales rose last month, breaking a three-month stretch of declines, thanks to higher inventories at slightly more attractive home prices.

All eyes will be on the Federal Reserve Jackson Hole event, though the symposium will be held virtually this year due to the health crisis. Fed Chairman Jerome Powell’s highly anticipated speech will be live-streamed on Friday. The theme of this year’s speech will be “Macroeconomic Policy in an Uneven Economy.”

FootLocker Surpasses Earning Expectations Leading To A Stock Rally

The shares of athletic footwear and workout apparel manufacturer FootLocker are rallying today after the company posted excellent gains earlier today.

FootLocker’s Revenue Surpasses Analysts’ Estimate

Leading athletic footwear and workout apparel manufacturer FootLocker revealed its second-quarter earnings for the 2021 fiscal year earlier today. FootLocker’s earnings in the previous quarter surpassed the earnings estimated by market analysts.

Revenue in Q2 was $2.28 billion, up by 9.5% from the same quarter of 2020. The $2.28 billion generated by FootLocker also surpassed the $2.09 billion expected by Wall Street analysts. The net income for FootLocker in the previous quarter was $430 million, or $4.09 per share, compared with $45 million, or 43 cents per share in Q2 2020.

Another aspect the company excelled in was its comparable sales. The comparable sales surged by 6.9%, while analysts had estimated a decline of 0.2% in the second quarter. FootLocker’s CFO, Andrew Page, said the company is very optimistic about its outlook for the second half of 2021.

He said, “Recognizing we are still operating in an uncertain environment due to Covid-19, we continue to keep a close eye on the business, including temporary store closures and supply chain challenges.”

FootLocker has been expanding its services in recent months. Earlier this month, the footwear manufacturer said it intends to acquire two smaller shoe store chains, with the deals expected to cost around $1.1 billion.

FM Up By Nearly 10% Today

The shares of FootLocker have been rallying since the company presented its Q2 earnings report earlier today. Currently, FM is trading above $58 per share, up by more than 8% so far today. Year-to-date, FM is also one of the top performers in its industry.

FM stock chart. Source: FXEMPIRE

FootLocker’s stock price is up 50% since the start of 2021. It began the year trading at $38 per coin, but it is now trading at $58 per share at the moment. The company intends to expand its reach by acquiring those companies. The deals are expected to take FootLocker’s products outside malls and ensure its entry into Asia.

Foot Locker to Buy Two Shoe Store Chains for $1.1 Billion

The company is buying California-based WSS for $750 million and Japanese streetwear retailer Atmos for $360 million, it said in separate statements.

Pent-up demand for sneakers and athletic gear from U.S. shoppers, as well as government stimulus have boosted Foot Locker’s sales this year, but the company has said it was looking to focus beyond malls whose traffic has been pressured by the pandemic and a surge in online shopping.

WSS has a fleet of 93 off-mall stores across California, Texas, Arizona and Nevada, and has a largely Hispanic consumer base which Foot Locker is looking to tap into.

Atmos, which has most of its 49 stores in Japan, is popular for its collection of special edition footwear in collaboration with brands including Nike Inc.

WSS and Atmos will continue to operate under their own names. Both the deals, which were first reported by the Wall Street Journal, will be funded through available cash, Foot Locker said.

Evercore served as financial adviser to Foot Locker on both the deals, while RW Baird advised WSS.

(Reporting by Uday Sampath in Bengaluru;editing by Vinay Dwivedi)

Foot Locker Runs Into Sellers as Sales Miss Forecasts

Shares in Foot Locker, Inc. (FL) plunged 8.8% Friday after the shoe seller posted mixed quarterly results wherein sales fell short of Wall Street expectations.

The mall-based retailer disclosed fourth quarter (Q4) revenues of $2.22 billion, with the figure missing analysts’ expectations by 0.71% and coming in below year-ago sales of $2.27 billion. Investors were also troubled by the company’s comparable store sales, which slumped 2.7% during the quarter versus expectations of a 4.9% increase. Foot Locker still has around 10% of its stores closed due to the pandemic.

In better news, the company’s bottom line grew 4.5% from a year earlier, helped by a 44% jump in online sales and improved margins. “Our digital business remained the catalyst through the quarter, delivering impressive double-digit growth overall with strengths across the board. In regions most heavily impacted by store closures, digital growth was up triple-digits. In fact, in Europe, COVID-related restrictions have been an accelerator for digital capability and growth,” CEO Dick Johnson told investors, per Yahoo! Finance.

Through Friday’s close, Foot Locker stock has a market capitalization of $5 billion, offers a 1.66% dividend yield, and trades up 18.92% on the year. Over the past 12 months, the shares have gained over 40%.

Wall Street View

Last month, Cowen analyst John Kernan upped the investment firm’s price target on the stock to $66 from $55 while keeping his ‘Outperform’ recommendation. Kernan believes expectations are too low and valuation appears too cheap given ongoing government stimulus measures designed to encourage consumer spending.

Brokerage coverage elsewhere also remains mostly bullish. The stock receives 14 ‘Buy’ ratings, 7 ‘Hold’ ratings, and just 1 ‘Sell’ rating. As of March 1, the stock trades at a 15% discount to Wall Street’s 12-month median price target of $55.50.

Technical Outlook and Trading Tactics

Foot Locker shares have remained in a steady uptrend since bottoming out at the height of the March 2020 pandemic sell-off. Furthermore, a cross of the 50-day simple moving average (SMA) above the 200-day SMA in late September – referred to as a “golden cross” – confirmed the bullish price action.

Active traders should view the current earnings-driven weakness as a buying opportunity. Look to enter near $46, where the price finds a confluence of support from a multi-year trendline and the 50-day SMA. Those who take a trade should consider placing a stop-loss order under the January swing low at $42.69 and targeting a move to crucial overhead resistance at $64.

For a look at today’s earnings schedule, check out our earnings calendar.