Foot Locker stock forecast as shares plunge on supply chain warning

on Nov 19, 2021
  • Foot Locker share on Friday plummeted nearly 13% after announcing its most recent quarterly results.
  • The company announced its fiscal Q3 revenue and earnings before markets opened, beating estimates.
  • However, the footwear and accessories company warned about continued supply chain challenges in Q4.

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On Friday, Foot Locker Inc. (NYSE:FL) shares plummeted by nearly 13% after announcing its fiscal third-quarter results. The company reported its most recent quarterly results before markets opened, beating the consensus for analyst expectations on revenue and earnings. However, Foot Locker also warned that it expects supply chain challenges to continue during the holiday season.

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The company posted FQ3 non-GAAP earnings per share of $1.93, beating the consensus for analyst estimates of $1.37. In addition, its GAAP EPS of $1.52 outperformed the expectation of $1.40, while revenue for the quarter edged slightly higher by 3.3% from the same quarter a year ago to $2.18 billion, surpassing expectations by $40 million.

The stock is still up more than 28% this year despite Friday’s sharp pullback.

Should you bet on FL’s growth?

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From an investment perspective, analysts expect Foot Locker’s earnings per share to grow by more than 38% per year over the next five years. As a result, the stock could be a compelling option for growth investors.

In addition, Foot Locker trades at exciting trailing 12-month and forward P/E ratios of 5.17 and 7.49, respectively. Therefore, value investors could also find it as an exciting option for their portfolios.

Source – TradingView

Technically, Foot Locker stock seems to have recently plummeted to complete a downward breakout from an ascending channel formation. As a result, the stock has recovered from overbought conditions to move closer to the oversold territory of the 14-day RSI.

Therefore, investors could target technical rebound profits at about $52.36, or higher at 455.06, while $47.95 and $45.25 are crucial support zones.

The downward movement could continue

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In summary, although Foot Locker shares seem to have recently plummeted after issuing a supply chain warning, the stock is yet to reach oversold conditions, thus leaving room for more downward movement.

Therefore, given the supply chain constraints heading into the holidays, it may be best to monitor the performance before betting on growth.

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