Finish Line Company analysis and operations

Finish Line, Inc. is an interesting company that an investor could possibly do fairly well with over the next year. It is currently trading at close to its 52-week low and according to the charts its price is probably close to bottoming out. It has recently been trading in the 10.92 to 12.00 range with a 52-week high of just under 19.00. Its downward trend is primarily due to a lowering of the estimates by the company at a time when many of its competitors are raising theirs.

If taking a contrarian viewpoint, an investor looking specifically at the numbers would notice that FINL has a market cap of over 528 million, which is slightly lower than three companies in the same industry trading at much higher prices, has a P/E of under 11 which is significantly lower than almost every publicly traded company in the same industry and has earnings and annual income higher than all but three companies that are considered in the same industry. The comparisons are stark and unless the Finish Line is going to totally fail at its mission, then the stock could be trading at a rather large discount.

This could be due to the fact that the company just recently lowered their earnings estimate, and the analysts and investors could be unduly punishing them. Bank of America lowered their target price on the stock from $13 to $12 on August 16, 2006, which surely affected the price of the stock. As a lot of other industry stocks were on the upswing during the past 30 days, Finish Line was trending lower. Based on the charts, an investor should be able to purchase the stock at close to the $10 range or lower in the very near future.

If the stock trades that low, or if it starts an upward trend anytime soon, purchasing the stock would probably be a good idea.

Recommendations to purchase the stock for a long-term hold would probably ensure that investors would be happy with the outcome, as long as they were willing to hold the stock for at least a year or two. Average rate of return over the next couple of years could be close to 20% based on past performance and flat sales and profits. Bank of America says that the target price is $12, and if that holds true and an investor can purchase the stock at close to the $10 range then a twenty percent return on investment over the next 12-18 months is quite feasible.