Cabelas Inc (CAB), Foot Locker, Inc. (FL): What Sporting Retailer Is a Good Buy Now?

Foot Locker, Inc. (NYSE:FL) is the cheapest among the three. At $37 per share, Foot Locker, Inc. (NYSE:FL) is worth around $5.6 billion on the market. The market values Foot Locker, Inc. (NYSE:FL) at 6.1 times its trailing EBITDA. The company, incorporated in 1989, operates around 3,335 mall-based stores in several regions including the U.S., Europe, Australia and New Zealand.

Recently, the company announced that it had completed the acquisition of Runners Point Group, the Germany athletic store operator with 200 athletic retail stores in Germany. The acquisition seems to be the good move for Foot Locker, Inc. (NYSE:FL) to expand its existing European business. The company reported that it already had more than 600 Foot Locker stores with the 2012 revenue of more than $1 billion.

Among the three companies, Dick’s is the most profitable company with the highest Return On Invested Capital (ROIC) at 17.71% while the ROIC of Foot Locker came close at around 16.14%. Cabela’s is the least profitable business with the lowest ROIC at only 5.5%.

My Foolish take

Cabela’s does not seem to be a good pick now because of its extremely high valuation and the lowest profitability.

Among the three, I like Foot Locker the most because it has the lowest EBITDA multiple and the business delivered a good return on invested capital. Personally, I would expect Foot Locker might experience an EBITDA multiple of 9, or $54.60 per share, a 47% premium to its current stock price.

The article What Sporting Retailer Is a Good Buy Now? originally appeared on Fool.com is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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