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Buckle Q2 Preview: Can Shares Stay Hot?

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The Zacks Retail and Wholesale Sector has been scorching hot over the last month, increasing by more than 13% in value and outperforming the S&P 500 by a fair margin. However, the sector is still deep in the red YTD.

Below is a chart illustrating the sector’s performance over several timeframes compared to the S&P 500.

Zacks Investment Research
Image Source: Zacks Investment Research

A famous company within the sector, The Buckle (BKE - Free Report) , is on deck to reveal Q2 results on Friday, August 19th, before market open.

The Buckle is a leading retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious young men and women.

In addition, the company carries a Zacks Rank #3 (Hold) with an overall VGM Score of an A. How does the retail giant stack up heading into the print? Let’s take a closer look.

Share Performance & Valuation

Year-to-date, Buckle shares have tumbled, losing nearly 20% in value and extensively underperforming the S&P 500.

Zacks Investment Research
Image Source: Zacks Investment Research

However, over the last month, BKE shares have soared, tacking on a substantial 14% in value and easily crushing the S&P 500’s return of nearly 9%.

Zacks Investment Research
Image Source: Zacks Investment Research

In addition to strong share performance over the last month, BKE carries rock-solid valuation levels; the company’s 6.3X forward earnings multiple is nowhere near its five-year median of 11.3X and represents a massive 76% discount relative to its sector.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have been quiet for the quarter to be reported over the last 60 days, with zero estimate revisions coming in. Still, the Zacks Consensus EPS Estimate of $0.93 reflects a 10% Y/Y drop in quarterly earnings.

Zacks Investment Research
Image Source: Zacks Investment Research

However, the company’s top-line looks to register some growth – the Zacks Consensus Sales Estimate of $300 million reflects a respectable 1.6% increase from year-ago quarterly sales of $295 million.

Quarterly Performance & Market Reactions

BKE has been on an impressive earnings streak, exceeding the Zacks Consensus EPS Estimate in seven consecutive quarters. Just in its latest print, the company recorded a 1.8% bottom-line beat.

Top-line results have also been rock-solid, with Buckle registering six top-line beats over its last seven quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

The market has had mixed reactions in response to the company’s quarterly prints as of late, with shares moving down twice and up twice following its last four earnings releases.

Putting Everything Together

BKE shares are still in the red year-to-date, but they’ve posted market-beating returns over the last month.

In addition, shares trade at solid valuation levels, well below their five-year median and Zacks Sector.

Analysts have been quiet for the quarter to be reported, and estimates reflect a declining bottom-line but an increasing top-line – a reflection of margin compression.

Still, the company has consistently reported quarterly results above expectations, undoubtedly a positive.

Heading into the print, The Buckle (BKE - Free Report) carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of an A.


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