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The up and down retail earning season continues with a second-quarter beat from Foot Locker, Inc. FL. The price action following the surprise to the upside makes it the PreMarket Prep Stock of the Day.
Foot Locker Sprints Off July Low: Foot Locker bottomed almost a month after the S&P 500 index did, on July 14 at $23.14. That marked the lowest level for the issue since May 2020, when it bottomed at $21.94.
The stock capped a six-day winning streak on a closing basis on Wednesday, when it ended the session at $32.45. The actual high for the rebound was made the day prior at $33.20.
Foot Locker’s Mixed Q2 Report: Before the opening, the company reported second-quarter adjusted EPS of $1.10, which beat the analyst consensus estimate of 80 cents.
Second-quarter FY22 sales saw a decline of 9.2% year-on-year to $2.065 billion, missing the consensus estimate of $2.07 billion. Foot Locker saw comparable store sales decrease 10.3% versus last year, but the decline was less than what was expected.
The Street is applauding that Richard Johnson is set to retire as chairman and CEO and will be replaced by former Ulta Beauty Inc
ULTA executive chair and CEO Mary Dillon effective Sept. 1, 2022.
PreMarket Prep’s Take: When the issue was being covered on the show, it was trading sharply higher by nearly $7 at the $39 area. It had yet to establish the premarket high of $40.20.
“It was not such a great report, but the company is so cheap at six to seven earnings,” said co-host Dennis Dick.
“They have expected the worst from the company, with everyone buying online, and it has not materialized.”
Both hosts of the show were unwilling to attempt to go long the issue at this lofty level. And both agreed that investors looking to exit the issue in Friday’s session should consider $40 as a key resistance level.
Foot Locker Price Action: After a much higher open Friday ($39.59 vs. $31.98), Foot Locker made a few different attempts in the first 20 minutes to take a gang of sellers at $40 and failed. As a result, sellers became more aggressive and unloaded shares into weakness as opposed to selling on strength.
As of 1:15 p.m. EST, the stock had declined to $38.15 and rebounded into the mid-$38 handle. It should be noted that the issue is poised to post its highest close since Feb. 24 ($41.41). The following day after that high, Foot Locker cratered to $29.07 following a warning that 2022 sales would be lower due to expectations of selling fewer Nike Inc NKE products.
The discussion on the issue from Friday’s show can be found here:
Photo via Shutterstock.
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Image and article originally from www.benzinga.com. Read the original article here.