“Poised for Momentum Boom” — Zack’s Footwear Stock

I don’t write much about the various investment services available from Zack’s, simply because they don’t use teaser ads all that often (or at least, they don’t use fun ones that catch my interest).

But one crossed my screen just today that I thought some of you might be interested in — it’s an ad for their Momentum Trader service, so just by the name we’ll assume that they’re looking for earnings momentum and acceleration, and that they’re fairly nimble traders so they might well be right back out of this stock in a few weeks or months.

Here’s what they tell us:

“Don’t miss this chance to get a head start on the stock just posted on our Momentum Trader board. This athletic shoe and apparel company caused a buzz at Zacks by reporting second-quarter results that included a net income of $18 million compared to a loss of $18 million in the same quarter last year.

“This company is hot and its stock price is already trending upward. Its current-year earnings estimate just jumped to 81 cents from 78 cents seven days ago. Analysts predict 25% earnings growth for next year!”

“Today is the perfect time to get aboard this stock. Especially since you only have a few hours left to save 33% on the service that discovered it.”

That 33% savings, by the way, means you get a $1,500 service for a thousand bucks. Of course, when was the last time you saw a newsletter ad where they asked you to pay the full “retail” price?

“About three weeks from today, you’ll be glad I shared these picks with you. Zacks analysts just posted an athletic footwear stock that boomed in earnings.

“Now we believe its share price is about to jump as well. It was chosen from the same system that identified CSX, EAC, CMP, and AUY for huge gains in mere weeks while the S&P 500 fell. Stocks like these are being uncovered through a unique blend of technical and fundamental signals, one of the most powerful profit opportunities in our 30-year history.”

So not a huge amount to go on, but I’m sure the Thinkolator is up to the challenge for you today — if you want to jump on this one at the same time as all the Zack’s subscribers lined up for this Momentum Trader service, you’ll be looking at shares of …

Foot Locker (FL)

So it’s not a shoe maker, but a shoe retailer. I’m not all that enthused about a company that depends on consumer willingness to spend $150 for sneakers, but that trend has certainly been rock solid for decades so I may just be a fuddy duddy on this one.

Here’s a quote from a quick report on their last earnings report, from mid-August, to confirm:

“Foot Locker Inc. late Thursday reported it swung to a second-quarter net profit of $18 million, or 11 cents a share, from a net loss of $18 million, or 12 cents a share, last year. Second quarter sales increased 1.5% to $1.3 billion, while comparable-store sales in the period ended Aug. 2 fell 0.5%. The mean estimate of analysts polled by Thomson Reuters was for a per-share profit of 2 cents on revenue of $1.27 billion. The New York-based athletic apparel and footwear retailer expects full-year adjusted earnings of 70 cents to 85 cents a share, versus the consensus analyst estimate of 72 cents. Shares of Foot Locker closed at $15.28.”

Analysts did raise their targets to the low-80 cent per-share range for earnings (according to Yahoo it’s currently 84 cents). That still gives them a forward PE ratio of 17 … and not a lot of room for maneuvering, since their trailing PE ratio (also known as the “actual” PE ratio, not the guess) is 37. Pretty steep for a company that is unable to grow same store sales, though clearly there’s an expectation for a turnaround here.

I don’t know a lot about Foot Locker, other than the fact that I wander by their stores now and again — they did try to take over smaller rival Genesco a few times in recent years (they were rebuffed, as was Finish Line, another competitor who also eyed Genesco). It strikes me as a brand whose value, brand-wise, peaked in the late 1980s … but maybe I’m just being ornery.

If you’ve got a case to make for Foot Locker, whether it’s an endorsement of the momentum trading of Zack’s or a firm belief in the power of 25th Anniversary Air Jordans … well, I’m all ears.

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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1. I didn’t even know that Foot Locker was still around.

   [Reply]

   Posted by GTS | September 14, 2008, 11:45 pm

2. I would never pay their prices. How this company makes money is beyond me, all their stores are in malls and other high rent settings.

   [Reply]

   

   stock rookie Reply:
   September 15th, 2008 at 7:18 am

   I agree I would never pay those prices, but I think they still make money based on their appeal to teens.Teenagers with jobs and no bills don’t really think twice about paying that much for sneakers.

   [Reply]

   Posted by gca | September 15, 2008, 6:57 am

3. Some malls have a Footlocker, a Ladies Footlocker, AND a Kids Footlocker. Three different freakin stores in one mall. Talk about high overhead.

   [Reply]

   Posted by asafp | September 15, 2008, 7:39 am

4. Hi,

   I don’t get this – is this teaser from Zack’s old or fresh one? It says “In next three weeks when they report their earnings …… “ But FL already reported their earnings on Aug 8 and now they are trading 52 week high.

   Stockgumshoe are you late on this one or am I missing something here?

   Lee

   [Reply]

   Posted by lee | September 15, 2008, 8:17 am

5. The email is new — “few weeks” can mean anything, I suppose, but it’s also possible they recycled a teaser withou updating it. But this was the first time I saw it, got it on Friday.

   [Reply]

   

   StockGumshoe Reply:
   September 15th, 2008 at 12:01 pm

   Actually got another copy of this today … apparently “time is running out” to take advantage of Momentum Trader and their footgear stock.

   Who knows, maybe they’ll be right — it is true that Finish Line, one of their competitors, is among the top performing stocks this year.

   [Reply]

   Posted by StockGumshoe | September 15, 2008, 8:39 am

6. BOUGHT AUY LOST MY SHIRT!!!

   [Reply]

   Posted by John | September 15, 2008, 10:04 am

7. BOUGHT AUY, LOST MY SHIRT!!!

   [Reply]

   Posted by John | September 15, 2008, 10:06 am

8. BOUGHT AUY LOST MY SHIRT

   [Reply]

   Posted by John | September 15, 2008, 10:08 am

9. As for AUY, the problem is not buying the stock. It’s ignoring signals to SELL.

   [Reply]

   Posted by stockcrazy10 | September 15, 2008, 10:29 am

10. The drug dealers and welfare kids don’t have a problem spending that kins of money since all their money is someone else’s

    [Reply]

    Posted by oneinamill | September 15, 2008, 3:55 pm

11. Anyone w/ a wife and 2 or more daughters may not understand malls but can feel the (retail) pain. I personally don’t spend more than 30 minutes a year anywhere near a mall and that only to pick one of the above up who seem to too-regularly ’shop’ there. WOT, IMO.

    [Reply]

    Posted by Ima_Nemisis | September 18, 2008, 11:58 am