Foot Locker (FL) versus Designer Brands (DBI) Head to Head Contrast

Foot Locker (NYSE:FL) and Designer Brands (NYSE:DBI) are both retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.

Valuation & Earnings

This table compares Foot Locker and Designer Brands’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Foot Locker $7.94 billion 0.78 $541.00 million $4.71 11.72
Designer Brands $3.18 billion 0.50 -$20.47 million $1.66 12.21

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

Insider & Institutional Ownership

97.9% of Foot Locker shares are owned by institutional investors. Comparatively, 85.5% of Designer Brands shares are owned by institutional investors. 2.4% of Foot Locker shares are owned by company insiders. Comparatively, 17.4% of Designer Brands shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Foot Locker and Designer Brands, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Foot Locker 1 5 14 0 2.65
Designer Brands 0 1 0 1 3.00

Foot Locker currently has a consensus target price of $66.63, suggesting a potential upside of 20.71%. Designer Brands has a consensus target price of $24.00, suggesting a potential upside of 18.40%. Given Foot Locker’s higher probable upside, equities analysts clearly believe Foot Locker is more favorable than Designer Brands.

Dividends

Foot Locker pays an annual dividend of $1.52 per share and has a dividend yield of 2.8%. Designer Brands pays an annual dividend of $1.00 per share and has a dividend yield of 4.9%. Foot Locker pays out 32.3% of its earnings in the form of a dividend. Designer Brands pays out 60.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Foot Locker has increased its dividend for 8 consecutive years.

Profitability

This table compares Foot Locker and Designer Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Foot Locker 6.81% 21.92% 14.31%
Designer Brands -0.64% 14.76% 9.03%

Risk and Volatility

Foot Locker has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Designer Brands has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Summary

Foot Locker beats Designer Brands on 12 of the 18 factors compared between the two stocks.

Foot Locker Company Profile

Foot Locker, Inc., through its subsidiaries, operates as an athletic shoes and apparel retailer. The company operates in two segments, Athletic Stores and Direct-to-Customers. The Athletic Stores segment retails athletic footwear, apparel, accessories, and equipment under various formats, including Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep, and SIX:02. The Direct-to-Customers segment sells athletic footwear, apparel, equipment, and team licensed merchandise for high school and other athletes through Internet and mobile sites, and catalogs. This segment operates sites for eastbay.com, final-score.com, and eastbayteamsales.com, as well as footlocker.com, ladyfootlocker.com, six02.com, kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, footlocker.au, runnerspoint.com, and sidestep-shoes.com. As of February 3, 2018, the company operated 3,310 stores in 24 countries in North America, Europe, Australia, and New Zealand, as well as 98 franchised Foot Locker stores in the Middle East and 14 franchised Runners Point stores in Germany. Foot Locker, Inc. was founded in 1879 and is headquartered in New York, New York.

Designer Brands Company Profile

Designer Brands Inc. designs, producers, and retails footwear and accessories for women, men, and kids primarily in North America. It operates through three segments: The U.S. Retail, the Canada Retail, and the Brand Portfolio. The company also provides handbags, hosiery, jewelry, and other accessories. The company offers its products under the Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, Enzo Angiolini, Jessica Simpson, Lucky, and other brands. It operates vincecamuto.com and solesociety.com e-commerce sites. As of March 19, 2019, it operated a portfolio of retail concepts in approximately 1,000 locations under the DSW Designer Shoe Warehouse, The Shoe Company, and Shoe Warehouse banners. Designer Brands Inc. is based in Columbus, Ohio.

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