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The Buckle and Chewy have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – April 13, 2022 – Zacks Equity Research shares The Buckle, Inc. (BKE - Free Report) as the Bull of the Day and Chewy, Inc. (CHWY - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Brinker International, Inc. (EAT - Free Report) , BBQ Holdings, Inc. , and Dave & Buster's Entertainment, Inc. (PLAY - Free Report) .
The Buckle, Inc. is an apparel and footwear retailer that operates across most of the U.S. The Buckle posted a banner year in 2021 and its outlook is solid as consumers gravitate toward its competitively-priced denim and beyond.
The Buckle runs a financially sound operation, alongside a high dividend yield that helps make it a solid candidate amid rising interest rates and economic uncertainty.
Simple Retail
The Buckle is a retailer focused on what it calls 'better–priced' offerings across apparel, footwear, and accessories. The Nebraska-headquartered firm operates roughly 440 stores throughout 42 states, many of which are located within indoor and outdoor malls.
The company's offerings feature options for everyone from kids to adults, spanning both its own private labels and brand names. The Buckle sells everything from different styles of denim and sportswear to outerwear and boots. The Buckle, which boasts that it's known as a denim destination, also provides perks such as alterations, a frequent shopper program, and more.
Performance and Outlook
The Buckle went public in the early 1990s and posted YoY revenue growth every year outside of one tiny pullback until it fell on some lean years between 2015 and 2018. BKE started to get back on course in 2019 and 2020 before it posted a blowout 2021. The Buckle's revenue soared 44% last year from $901 million to $1.30 billion, which was a new company record.
BKE's comparable store sales matched its overall top-line growth, with online revenue up 16% to account for 17% of total revenue. The retailer's bottom-line performance was even better. The Buckle's adjusted earnings soared 94% to $5.16 per share, while its net profit margin came in at 20% for 2021.
The Buckle topped our Q4 earnings estimate by 14% on March 11 and it's now beaten the Zacks EPS estimate by an average of 45% in the trailing four quarters. The company's FY22 consensus earnings estimate popped 9% since its release on the back of solid guidance. The bottom-line revisions positivity is part of a longer-term upward revisions trend for Buckle's earnings.
The Buckle is projected to follow up its great 2021 with 9% higher sales in 2022 and 2% stronger adjusted earnings, based on the most recent Zacks estimates. The company is then projected to post both top and bottom line expansion in 2023.
Other Fundamentals
The Buckle flexed its financial strength in December when it announced a $5.65 per share special cash dividend. The company also raised its quarterly cash dividend by 6% to $0.35 per share. That payout is good enough to yield 4.33% at the moment to blow away the rising 10-year U.S. Treasury's 2.7%.
BKE's dividend yield easily tops Nordstrom's 2.6%, Macy's 2.5%, the S&P 500's 1.3%, and stands out compared to many of its Retail - Apparel and Shoes peers that don't pay a dividend. It is worth pointing out that The Buckle's next payment date is April 28 to shareholders of record at the close of business on April 14—the ex-dividend date for a stock is typically one business day before the record date.
The Buckle's dividend yield isn't artificially inflated by a falling stock price. BKE stock has surged 180% in the last two years off its covid lows to outpace its industry's 53% climb. Looking back over the past five years, Buckle shares have climbed 224% vs. its industry's 28% downturn and the S&P 500's 120%.
The stock is now down 10% in the last 12 months, including a roughly 30% drop since November to trade at around $32 per share. The pullback, coupled with The Buckle's strong earnings outlook has it trading right near decade-long lows of 6.14X forward 12-month earnings. This marks a 40% discount compared to its Apparel and Shoes industry and even stronger value vs. the broader Zacks Nonfood Retail Market.
Bottom Line
The Buckle's earnings revisions activity helps it land Zacks Rank #1 (Strong Buy) right now, alongside its "B" grade for Value and "A" for Growth in our Style Scores system.
The Buckle stock is somewhat heavily shorted at the moment, which might deter some investors. But the fashion retailer still sits on a strong balance sheet, alongside many other appealing qualities for the current market, from value to dividends.
E-commerce pet store standout Chewy, Inc. has been hit hard by rising costs and supply chain setbacks. The company fell way short of Q4 earnings estimates in late March and provided rather dismal guidance that sent the stock tumbling.
The Chewy Story
Chewy operates a really straightforward digital commerce business. The company sells pet food, supplies, treats, medications, and more for a variety of animals and ships the products to the consumer. CHWY capitalized on massive e-commerce expansion over the past 10 years, as shoppers clamor for convenience.
Chewy's strength is largely based on its ability to add loyal pet owners to its Autoship business allows customers to have pet food, toys and more delivered at regular intervals. Chewy also expanded into telehealth and virtual vet visits. All of these efforts, coupled with the pandemic, helped its 2020 revenue climb 47% to $7.15 billion.
Chewy followed that up with another 24% sales growth in 2021. The company also added 1.5 million new active customers last year to close the period with 20.7 million, up 8% YoY. Unfortunately, Chewy's fourth quarter active adds came in softer than expected and its revenue growth slowed to 17%.
The company reported a net loss of $63.6 million in the fourth quarter, as its costs, including labor, freight, and beyond all soared. Analysts raced to lower their earnings estimates for 2022 and 2023 after its March 29 financial release, with Chewy's near-term headwinds not set to die down anytime soon.
Bottom Line
Chewy's consensus adjusted FY22 EPS estimate dropped from +$0.03 per share before its fourth quarter release to a loss of -$0.43 a share right now. CHWY's FY23 consensus also slipped all from +$0.39 to -$0.16 per share. These rough bottom-line revisions help Chewy land a Zacks Rank #5 (Strong Sell) at the moment.
Chewy's revenue is still projected to grow another 16% both this year and next to hit $12 billion in 2023. The company's active users and Autoship customers continue to drive sales, and CHWY might succeed over the long haul.
However, CHWY stock has tumbled 45% since the start of November and investors are likely wise to stay away from Chewy amid the current market and economic conditions. And its Consumer Products – Staples space currently sits in the bottom 6% of over 250 Zacks industries.
Additional content:
Brinker (EAT - Free Report) -48% in Past Year: Value or Trap?
Shares of Brinker International, Inc. have been hit hard by the coronavirus pandemic and high costs in the past year. The stock has plunged 48.3% in the past year, compared with the industry's decline of 12.8%.
However, the company has been showing some resilience of late, with the stock gaining 2% in the past month. In the past 30 days, earnings estimates for the current quarter have increased 1% to 99 cents. The company has an impressive long-term earnings growth rate of 10%.
Brinker has been benefiting from sales-building efforts such as streamlining the menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of a better service platform.
Chili's turnaround strategies continue to yield positive results with traffic and sales. During the second quarter, Chili's total revenues increased 16.1% year over year. The upside was primarily driven by higher dining room guest sales and traffic, the acquisition of 60 Chili's restaurants from two former franchisees and six new restaurant openings.
However, this was partially offset by a fall in off-premise sales. Comps at Chili's franchised restaurants increased 17% against a decline of 9% in the year-ago quarter. The upside can be attributed to an increase in dining room sales and traffic at the company's franchise restaurants.
At internationally franchised Chili's restaurants, the same surged 27.7% against the year-ago quarter's decline of 16.2%. In the U.S. franchised units, comps climbed 4.8% versus the year-ago quarter's slump of 4.7%.
Brinker is one of the few fast-casual restaurant chains that have been expanding despite sluggish economic development. Management is gearing up for international expansion as well, especially in the faster-growing emerging markets. During fiscal 2021, the company opened 18 new restaurants, including eight company-owned, and 10 total franchises.
During the fiscal year, the company opened restaurants in six new locations and entered into two new arrangements, one with an existing franchise partner and another with a new franchise partner. During the first and the second quarter of fiscal 2022, the company opened four and seven restaurants, respectively. During fiscal 2022, the company anticipates opening 17-20 restaurants.
The company is investing heavily in technology-driven initiatives, like online ordering to augment sales and boost guest services. During the fiscal second quarter, Brinker initiated the rollout of two technology systems, particularly for Chili's. The company implemented a handheld system with a focus on redefining guest services. The system bolsters table coverage and prospects for earning money. The company stated that initial results have remained strong, backed by 15% higher server earnings and significant improvements in guest metrics.
The company initiated a new curbside system, thereby capitalizing on increased demand for off-premise dining. With a focus on providing a more seamless guest experience, restaurants with adopted systems have been generating 15 to 20-point improvements in guest metrics. Backed by the promising results of its technological systems, the company intends to strengthen its base to accelerate additional growth vehicles in the upcoming periods.
Key Picks
Some better-ranked stocks in the same space include BBQ Holdings, Inc., and Dave & Buster's Entertainment, Inc.
BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have rallied 47.1% in the past year.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and earnings per share (EPS) suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Dave & Buster's carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have declined 1.8% in the past year.
The Zacks Consensus Estimate for Dave & Buster's 2022 sales and EPS suggests growth of 24.4% and 49.3%, respectively, from the year-ago period's levels.
Why Haven't You Looked at Zacks' Top Stocks?
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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The Buckle and Chewy have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 13, 2022 – Zacks Equity Research shares The Buckle, Inc. (BKE - Free Report) as the Bull of the Day and Chewy, Inc. (CHWY - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Brinker International, Inc. (EAT - Free Report) , BBQ Holdings, Inc. , and Dave & Buster's Entertainment, Inc. (PLAY - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
The Buckle, Inc. is an apparel and footwear retailer that operates across most of the U.S. The Buckle posted a banner year in 2021 and its outlook is solid as consumers gravitate toward its competitively-priced denim and beyond.
The Buckle runs a financially sound operation, alongside a high dividend yield that helps make it a solid candidate amid rising interest rates and economic uncertainty.
Simple Retail
The Buckle is a retailer focused on what it calls 'better–priced' offerings across apparel, footwear, and accessories. The Nebraska-headquartered firm operates roughly 440 stores throughout 42 states, many of which are located within indoor and outdoor malls.
The company's offerings feature options for everyone from kids to adults, spanning both its own private labels and brand names. The Buckle sells everything from different styles of denim and sportswear to outerwear and boots. The Buckle, which boasts that it's known as a denim destination, also provides perks such as alterations, a frequent shopper program, and more.
Performance and Outlook
The Buckle went public in the early 1990s and posted YoY revenue growth every year outside of one tiny pullback until it fell on some lean years between 2015 and 2018. BKE started to get back on course in 2019 and 2020 before it posted a blowout 2021. The Buckle's revenue soared 44% last year from $901 million to $1.30 billion, which was a new company record.
BKE's comparable store sales matched its overall top-line growth, with online revenue up 16% to account for 17% of total revenue. The retailer's bottom-line performance was even better. The Buckle's adjusted earnings soared 94% to $5.16 per share, while its net profit margin came in at 20% for 2021.
The Buckle topped our Q4 earnings estimate by 14% on March 11 and it's now beaten the Zacks EPS estimate by an average of 45% in the trailing four quarters. The company's FY22 consensus earnings estimate popped 9% since its release on the back of solid guidance. The bottom-line revisions positivity is part of a longer-term upward revisions trend for Buckle's earnings.
The Buckle is projected to follow up its great 2021 with 9% higher sales in 2022 and 2% stronger adjusted earnings, based on the most recent Zacks estimates. The company is then projected to post both top and bottom line expansion in 2023.
Other Fundamentals
The Buckle flexed its financial strength in December when it announced a $5.65 per share special cash dividend. The company also raised its quarterly cash dividend by 6% to $0.35 per share. That payout is good enough to yield 4.33% at the moment to blow away the rising 10-year U.S. Treasury's 2.7%.
BKE's dividend yield easily tops Nordstrom's 2.6%, Macy's 2.5%, the S&P 500's 1.3%, and stands out compared to many of its Retail - Apparel and Shoes peers that don't pay a dividend. It is worth pointing out that The Buckle's next payment date is April 28 to shareholders of record at the close of business on April 14—the ex-dividend date for a stock is typically one business day before the record date.
The Buckle's dividend yield isn't artificially inflated by a falling stock price. BKE stock has surged 180% in the last two years off its covid lows to outpace its industry's 53% climb. Looking back over the past five years, Buckle shares have climbed 224% vs. its industry's 28% downturn and the S&P 500's 120%.
The stock is now down 10% in the last 12 months, including a roughly 30% drop since November to trade at around $32 per share. The pullback, coupled with The Buckle's strong earnings outlook has it trading right near decade-long lows of 6.14X forward 12-month earnings. This marks a 40% discount compared to its Apparel and Shoes industry and even stronger value vs. the broader Zacks Nonfood Retail Market.
Bottom Line
The Buckle's earnings revisions activity helps it land Zacks Rank #1 (Strong Buy) right now, alongside its "B" grade for Value and "A" for Growth in our Style Scores system.
The Buckle stock is somewhat heavily shorted at the moment, which might deter some investors. But the fashion retailer still sits on a strong balance sheet, alongside many other appealing qualities for the current market, from value to dividends.
Bear of the Day:
E-commerce pet store standout Chewy, Inc. has been hit hard by rising costs and supply chain setbacks. The company fell way short of Q4 earnings estimates in late March and provided rather dismal guidance that sent the stock tumbling.
The Chewy Story
Chewy operates a really straightforward digital commerce business. The company sells pet food, supplies, treats, medications, and more for a variety of animals and ships the products to the consumer. CHWY capitalized on massive e-commerce expansion over the past 10 years, as shoppers clamor for convenience.
Chewy's strength is largely based on its ability to add loyal pet owners to its Autoship business allows customers to have pet food, toys and more delivered at regular intervals. Chewy also expanded into telehealth and virtual vet visits. All of these efforts, coupled with the pandemic, helped its 2020 revenue climb 47% to $7.15 billion.
Chewy followed that up with another 24% sales growth in 2021. The company also added 1.5 million new active customers last year to close the period with 20.7 million, up 8% YoY. Unfortunately, Chewy's fourth quarter active adds came in softer than expected and its revenue growth slowed to 17%.
The company reported a net loss of $63.6 million in the fourth quarter, as its costs, including labor, freight, and beyond all soared. Analysts raced to lower their earnings estimates for 2022 and 2023 after its March 29 financial release, with Chewy's near-term headwinds not set to die down anytime soon.
Bottom Line
Chewy's consensus adjusted FY22 EPS estimate dropped from +$0.03 per share before its fourth quarter release to a loss of -$0.43 a share right now. CHWY's FY23 consensus also slipped all from +$0.39 to -$0.16 per share. These rough bottom-line revisions help Chewy land a Zacks Rank #5 (Strong Sell) at the moment.
Chewy's revenue is still projected to grow another 16% both this year and next to hit $12 billion in 2023. The company's active users and Autoship customers continue to drive sales, and CHWY might succeed over the long haul.
However, CHWY stock has tumbled 45% since the start of November and investors are likely wise to stay away from Chewy amid the current market and economic conditions. And its Consumer Products – Staples space currently sits in the bottom 6% of over 250 Zacks industries.
Additional content:
Brinker (EAT - Free Report) -48% in Past Year: Value or Trap?
Shares of Brinker International, Inc. have been hit hard by the coronavirus pandemic and high costs in the past year. The stock has plunged 48.3% in the past year, compared with the industry's decline of 12.8%.
However, the company has been showing some resilience of late, with the stock gaining 2% in the past month. In the past 30 days, earnings estimates for the current quarter have increased 1% to 99 cents. The company has an impressive long-term earnings growth rate of 10%.
Let's delve deeper and analyze the factors likely to drive the Zacks Rank #2 (Buy) company's performance. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Key Catalysts
Brinker has been benefiting from sales-building efforts such as streamlining the menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of a better service platform.
Chili's turnaround strategies continue to yield positive results with traffic and sales. During the second quarter, Chili's total revenues increased 16.1% year over year. The upside was primarily driven by higher dining room guest sales and traffic, the acquisition of 60 Chili's restaurants from two former franchisees and six new restaurant openings.
However, this was partially offset by a fall in off-premise sales. Comps at Chili's franchised restaurants increased 17% against a decline of 9% in the year-ago quarter. The upside can be attributed to an increase in dining room sales and traffic at the company's franchise restaurants.
At internationally franchised Chili's restaurants, the same surged 27.7% against the year-ago quarter's decline of 16.2%. In the U.S. franchised units, comps climbed 4.8% versus the year-ago quarter's slump of 4.7%.
Brinker is one of the few fast-casual restaurant chains that have been expanding despite sluggish economic development. Management is gearing up for international expansion as well, especially in the faster-growing emerging markets. During fiscal 2021, the company opened 18 new restaurants, including eight company-owned, and 10 total franchises.
During the fiscal year, the company opened restaurants in six new locations and entered into two new arrangements, one with an existing franchise partner and another with a new franchise partner. During the first and the second quarter of fiscal 2022, the company opened four and seven restaurants, respectively. During fiscal 2022, the company anticipates opening 17-20 restaurants.
The company is investing heavily in technology-driven initiatives, like online ordering to augment sales and boost guest services. During the fiscal second quarter, Brinker initiated the rollout of two technology systems, particularly for Chili's. The company implemented a handheld system with a focus on redefining guest services. The system bolsters table coverage and prospects for earning money. The company stated that initial results have remained strong, backed by 15% higher server earnings and significant improvements in guest metrics.
The company initiated a new curbside system, thereby capitalizing on increased demand for off-premise dining. With a focus on providing a more seamless guest experience, restaurants with adopted systems have been generating 15 to 20-point improvements in guest metrics. Backed by the promising results of its technological systems, the company intends to strengthen its base to accelerate additional growth vehicles in the upcoming periods.
Key Picks
Some better-ranked stocks in the same space include BBQ Holdings, Inc., and Dave & Buster's Entertainment, Inc.
BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have rallied 47.1% in the past year.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and earnings per share (EPS) suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Dave & Buster's carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have declined 1.8% in the past year.
The Zacks Consensus Estimate for Dave & Buster's 2022 sales and EPS suggests growth of 24.4% and 49.3%, respectively, from the year-ago period's levels.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.