After the close of the markets today, sneaker seller Finish Line (NASDAQ:FINL) will report first-quarter 2008 earnings. While I'm sure they'll be interesting, the real topic of conversation will be the company's cocked-eyebrow proposal to acquire Genesco (NYSE:GCO) in a $1.5 billion deal.
After earnings are released, we'll be able to wade through the data. Before then, however, let's review what investors think about Finish Line as a long-term investment. To get the pulse of the community, I tapped into Motley Fool CAPS, where more than 31,000 raters have weighed in on 4,700 stocks, Finish Line among them. Here's what Fools have to say about the company.
Up or down?
Some 84 professional and novice investors have weighed in on Finish Line, where less than two-thirds think the mall-based retailer will outperform the market. They've bestowed the lowest one-star rating on the company.
Interestingly, the CAPS All-Stars, who consistently outperform their peers over time, are more divided about Finish Line. One-third of the players opining are at the top of their game, and they're almost evenly divided, with outperformance just edging out underperformance.
Among companies considered peers of Finish Line, the retailer finds itself trampled underfoot:
|
Apparel Stores | |
|---|---|
|
DSW (NYSE:DSW) |
**** |
|
Payless Shoesource (NYSE:PSS) |
**** |
|
Genesco |
*** |
|
Foot Locker (NYSE:FL) |
** |
|
Shoe Carnival (NASDAQ:SCVL) |
** |
|
Finish Line |
* |
Wall St. vs. Main St.
Depending on your view of Finish Line, there are an unlucky, or lucky, 13 analysts trying on the retailer. The vast majority -- 11 in all -- rate it a hold. The other two are evenly divided between buy and sell ratings. That's not the feeling over on CAPS, where the two analysts we track both rate it an underperform.
Sales are forecast to decline 0.2% to $288.4 million, while earnings are expected to turn from a profit of $0.09 per share last year to a $0.10-per-share loss this quarter.
Bull pitch
The top bull pitch for Finish Line notes:
Even though the earnings and sales (monthly) have been looking weak i think that the expectations going forward are now achievable for some good growth. They also have a better product mix at least in my opinion than what they have had in the past two years or so. There are a lot of high end shoes that are actually nice looking and are good quality. I think that this along with the lowering of prices or sales on its jerseys will help this stock hit twenty over the next several months.
Bear pitch
One bear concern is the acquisition. An All-Star worries: "Finish Line looked ok on its own, but with the new acquisition, they will need to perform spot-on, which won't happen when consumer spending becomes even more sluggish. Possibly a decent acquisition strategy-wise, but the timing is poor."
My pitch
On several metrics, the Genesco deal doesn't look like an overly expensive acquisition. But the $1.6 billion in debt Finish Line is taking on buy the company, at a time when footwear sales are slowing, will require it to execute perfectly. Genesco's Journeys stores will give Finish Line a place in the fashion footwear market, though the potential contributions of the Hat World concept seem debatable.
Nike (NYSE:NKE) was able to sport some decent quarterly numbers, causing a number of footwear stocks to rise, but I have a hard time seeing this company doing anything but underperforming for a while.
Your pitch
What do you think? Learn the identities of the wise Fools are who penned the words above, add your own commentary to either the bull or bear side, and explore the multitude of financial data that's been compiled on Finish Line, all by just clicking here.
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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
