Foot Locker (NYSE: FL) and Michael Kors Holdings Limited (NYSE:KORS) are both mid-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their profitability, earnings, valuation, institutional ownership, dividends, analyst recommendations and risk.

Profitability

This table compares Foot Locker and Michael Kors Holdings Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Foot Locker 7.49% 21.52% 15.50%
Michael Kors Holdings Limited 11.91% 40.26% 26.12%

Valuation & Earnings

This table compares Foot Locker and Michael Kors Holdings Limited’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Foot Locker $7.70 billion 0.60 $1.06 billion $4.34 8.08
Michael Kors Holdings Limited $4.46 billion 1.57 $1.07 billion $3.22 14.34

Michael Kors Holdings Limited has higher revenue, but lower earnings than Foot Locker. Foot Locker is trading at a lower price-to-earnings ratio than Michael Kors Holdings Limited, 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 3.5%. Michael Kors Holdings Limited does not pay a dividend. Foot Locker pays out 28.6% of its earnings in the form of a dividend. Michael Kors Holdings Limited has increased its dividend for 6 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Foot Locker and Michael Kors Holdings Limited, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Foot Locker 1 12 11 0 2.42
Michael Kors Holdings Limited 3 18 5 0 2.08

Foot Locker presently has a consensus target price of $63.95, indicating a potential upside of 82.45%. Michael Kors Holdings Limited has a consensus target price of $43.39, indicating a potential downside of 6.04%. Given Foot Locker’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Foot Locker is more favorable than Michael Kors Holdings Limited.

Insider and Institutional Ownership

96.8% of Foot Locker shares are owned by institutional investors. Comparatively, 83.4% of Michael Kors Holdings Limited shares are owned by institutional investors. 1.7% of Foot Locker shares are owned by company insiders. Comparatively, 6.0% of Michael Kors Holdings Limited shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Michael Kors Holdings Limited beats Foot Locker on 9 of the 16 factors compared between the two stocks.

Foot Locker Company Profile

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).

Michael Kors Holdings Limited Company Profile

Michael Kors Holdings Limited is a designer, marketer, distributor and retailer of branded women’s apparel and accessories and men’s apparel bearing the Michael Kors tradename and related trademarks MICHAEL KORS, MICHAEL MICHAEL KORS, and various other related trademarks and logos. The Company operates through three segments: retail, wholesale and licensing. The Retail operations consist of collection stores and lifestyle stores, including concessions and outlet stores, located primarily in the Americas (the United States, Canada and Latin America), Europe and Asia, as well as e-commerce. Wholesale revenues are principally derived from major department and specialty stores located throughout the Americas, Europe and Asia. The Company licenses its trademarks on products, such as fragrances, beauty, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties, as well as through geographic licenses.

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