Critical Survey: Francesca’s Holdings Corporation (NASDAQ:FRAN) and Foot Locker (FL)

Francesca’s Holdings Corporation (NASDAQ: FRAN) and Foot Locker (NYSE:FL) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Earnings & Valuation

This table compares Francesca’s Holdings Corporation and Foot Locker’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Francesca’s Holdings Corporation $493.21 million 0.51 $78.79 million $0.97 7.09
Foot Locker $7.70 billion 0.50 $1.06 billion $4.34 7.13

Foot Locker has higher revenue and earnings than Francesca’s Holdings Corporation. Francesca’s Holdings Corporation is trading at a lower price-to-earnings ratio than Foot Locker, indicating that it is currently the more affordable of the two stocks.

Dividends

Foot Locker pays an annual dividend of $1.24 per share and has a dividend yield of 4.0%. Francesca’s Holdings Corporation does not pay a dividend. Foot Locker pays out 28.6% of its earnings in the form of a dividend. Foot Locker has increased its dividend for 6 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and target prices for Francesca’s Holdings Corporation and Foot Locker, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Francesca’s Holdings Corporation 0 6 2 0 2.25
Foot Locker 1 12 11 0 2.42

Francesca’s Holdings Corporation currently has a consensus target price of $13.86, suggesting a potential upside of 101.56%. Foot Locker has a consensus target price of $63.27, suggesting a potential upside of 104.41%. Given Foot Locker’s stronger consensus rating and higher possible upside, analysts clearly believe Foot Locker is more favorable than Francesca’s Holdings Corporation.

Volatility and Risk

Francesca’s Holdings Corporation has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, Foot Locker has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.

Insider & Institutional Ownership

96.6% of Foot Locker shares are held by institutional investors. 1.2% of Francesca’s Holdings Corporation shares are held by company insiders. Comparatively, 1.7% of Foot Locker shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Francesca’s Holdings Corporation and Foot Locker’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Francesca’s Holdings Corporation 7.28% 31.88% 18.83%
Foot Locker 7.49% 21.52% 15.50%

Summary

Foot Locker beats Francesca’s Holdings Corporation on 12 of the 17 factors compared between the two stocks.

About Francesca’s Holdings Corporation

Francesca’s Holdings Corporation is a holding company. The Company is a specialty retailer, which operates a chain of boutiques across the United States. The Company offers a mix of apparel, jewelry, accessories and gifts. As of January 28, 2017, the Company operated 671 boutiques in 48 states and the District of Columbia, and also served its customers through www.francescas.com, its e-commerce Website. The Company offers apparel, such as dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates. The Company provides jewelry, such as necklaces, earrings, bracelets and rings. The Company offers accessories, such as handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches and hair accessories. The Company provides gifts, such as fragrance, candles, bath and body, home accessories, books, wall art, nail polish and miscellaneous items. The Company operates its boutiques under the francesca’s brand.

About Foot Locker

Foot Locker, Inc. is a retailer of shoes and apparel. The Company operates through two segments: Athletic Stores and Direct-to-Customers. The Company is an athletic footwear and apparel retailer, which include businesses, such as include Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep and SIX:02. The Direct-to-Customers segment is multi-branded and sells directly to customers through Internet and mobile sites and catalogs. The Direct-to-Customers segment operates the Websites for eastbay.com, final-score.com, eastbayteamsales.com and sp24.com. Additionally, this segment includes the Websites, both desktop and mobile, aligned with the brand names of its store banners (footlocker.com, ladyfootlocker.com, six02.com kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, runnerspoint.com and sidestep-shoes.com).

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