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Analyst Blog

On May 29, 2013, Zacks Investment Research upgraded Bon-Ton Stores, Inc. (BONT) to a Zacks Rank #1 (Strong Buy). Shares of this department store retailer of apparel, accessories, cosmetics, home furnishings and footwear have amassed an impressive year-to-date return of roughly 75%.

Why the Upgrade?

Bon-Ton has been witnessing rising earnings estimates on the back of better-than-expected first-quarter fiscal 2013 results in spite of inclement weather. The impressive results were attributable to double-digit sales growth across its eCommerce business and higher penetration of proprietary credit card sales. Moreover, favorable product mix led to an improvement in the gross margin.

The company declared first-quarter results on May 23, 2013, posting a loss of $1.40 per share that not only fared better than the Zacks Consensus Estimate of loss of $1.84 but also portrayed a drastic improvement from a loss of $2.18 in the year-ago quarter.

Bon-Ton’s total revenue inched up 1.2% to $661.9 million in the quarter from $654.3 million in the year-ago period. Comparable-store sales for the quarter climbed 1.2%. Gross margin during the quarter expanded 57 basis points to 34.8% due to lower markdowns.

Despite healthy results, management reaffirmed its fiscal 2013 earnings guidance of 40 cents to $1.00 per share. Following the results, the Zacks Consensus Estimate for fiscal 2013 surged significantly by 41.3% to 89 cents per share over the last 30 days.

Other Stocks to Consider

Apart from Bon-Ton, there are other stocks with a favorable Zacks Rank, which are capable of continuing with their upbeat performances. These include Dillard’s Inc. (DDS - Analyst Report), Flowers Foods, Inc. (FLO - Snapshot Report) and Michael Kors Holdings Limited (KORS - Analyst Report), all carrying a Zacks Rank #1 (Strong Buy).

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