3 Things Wall Street Expects From Finish Line in Q2

Finish Line
Finish Line at The Mall at Millenia in Orlando, Fla.
Finish Line.

Things had been tumultuous for Finish Line Inc. for much of the past year and a half, but the retailer has been showing some major comeback potential in recent months.

After a supply chain hiccup stifled the firm’s performance in 2015, Finish Line emerged in Q4 and Q1 by handily topping market watchers’ forecasts for sales and profit.

With another earnings report for the retailer due on Sept. 23, here is what Wall Street is saying now.

Less Profit, More Revenues

Consensus estimates predict that Finish Line will see its earnings per share shed 4 cents, year-over-year, to 53 cents. Meanwhile, revenues are expected to advance 2.4 percent year-over-year, to $494.8 million. Comparable store sales are pegged to gain 3 percent.

A Beat & Rally In Shares

Even though he placed his bets just below consensus, Canaccord Genuity Inc. analyst Camilo Lyon said he remains positive on Finish Line’s stock headed into the Sept. 23 report as he believes a beat could be in the cards.

“We believe there is upside to our 2 percent comp and 51 cents EPS estimate,” Lyon wrote on Sept. 21. “While Q2’s [profit and loss] dynamics will likely look similar to Q1’s, Finish Line should show modest sequential improvement in comps, which we believe can be in the 3 percent to 4 percent range — implying a 1 cent to 2 cents beat relative to consensus estimates.”

Likely experiencing a similar train of thought, Cowen and Co. analyst John Kernan raised his comp estimate to 4 percent on Aug. 24. Kernan is also placing his EPS bets above consensus, at 55 cents per share.

“We continue to view the stock favorably given our expectations for a strong second half comp and margin recovery supported by an increasing mix of Adidas, improved supply chain processes, a clean inventory position, and trends indicating a resurgence in running,” Lyon wrote.

Footwear Will Lead Growth But Foot Locker Remains King

Analysts also believe that strong athletic trends helped Finish Line in Q2.

“By category, we believe footwear was the key growth driver as soft goods (10 percent of sales) likely remained challenged,” Lyon wrote of Finish Line’s Q2.

Still, Kernan and Susquehanna International Group LLP analyst Sam Poser both contend that despite some improvements at Finish Line, Foot Locker Inc. will remain the dominant specialty athletic retailer for some time.

“Our [recent] survey of 2,500 consumers suggests that Foot Locker is the destination of choice for sneakers across demographics,” Kernan wrote. “Only 5 percent of total respondents considered Finish Line their destination of choice for sneakers. We do not see a catalyst for Finish Line’s sales to meaningfully increase from a low-single-digit same-store sales growth rate.”

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