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BURL Stock Falls 9% From 52-Week High: Thinking of Buying the Dip?
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Burlington Stores, Inc. (BURL - Free Report) shares are currently trading 8.7% below the 52-week high of $282.49 reached on Aug. 29, 2024, making investors contemplate their next moves. Over the past six months, the BURL stock has gained 45.1%, outperforming the Zacks Retail-Discount Stores industry’s 14.1% growth. As the market fluctuates and the holiday season approaches, the question is whether you should buy, hold or sell the BURL stock.
The company’s initiatives, including enhancing merchandising capabilities and optimizing store operations, have supported it to outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 14.7% and 16.9% in the same period.
Image Source: Zacks Investment Research
BURL, a nationally recognized off-price retailer, closed Friday’s trading session at $257.78. The stock is trading above its 200-day and 100-day simple moving averages of $225.85 and $252.76, respectively, highlighting a continued uptrend.
Image Source: Zacks Investment Research
BURL's Remarkable Growth Strategies are Driving Success
Burlington is experiencing strong growth by providing high-quality merchandise at competitive prices. The company’s growth strategy emphasizes rapid store expansion, operational efficiency and robust inventory management, all of which are crucial for solidifying its market presence. Burlington's continuous investment in its supply chain enhances its potential for long-term growth.
In the second quarter of fiscal 2024, BURL achieved an impressive 13.4% year-over-year increase in total sales, outpacing 9% growth in the prior-year quarter. This success was primarily driven by the addition of 36 stores, raising the total to 1,057. The company is set to open another 100 stores and relocate 30 by the end of fiscal 2024.
Comparable store sales increased by a healthy 5%, exceeding the company's expectations of flat to 2% growth. This strong performance was fueled by a 7% rise in full-price sales and a decrease in markdowns during the quarter. Despite concerns about potential cannibalization from new stores, Burlington's commitment to merchandising excellence and improved customer engagement helped it sustain its sales momentum.
The company’s operating margin expanded by 160 basis points, benefiting from an enhanced gross margin and supply-chain efficiencies. The gross margin improved by 110 basis points to 42.8%, driven by quicker inventory turnover and fewer markdowns.
Burlington’s Optimistic Outlook for FY24
BURL has updated its fiscal 2024 guidance and made it more optimistic. Total sales are expected to grow 9-10%, an increase from the previously stated 8-10%. Comparable store sales are projected to increase 2-3%, improving from the earlier mentioned 0-2%.
The adjusted EBIT margin is expected to rise 50-70 basis points, higher than the previously mentioned 40-60 basis points. Adjusted earnings per share (EPS) are anticipated between $7.66 and $7.96, up from the earlier stated $7.35-$7.75.
For the fiscal third quarter, Burlington forecasts total sales growth of 10-12%, with comparable sales growth of 0-2% and an adjusted EBIT margin improvement of 60-80 basis points. In the fiscal fourth quarter, comparable sales are expected to either remain flat or increase by up to 2%, with total sales growth anticipated at 5-7%.
Is Burlington a Value Play Stock?
From a valuation perspective, the stock presents an attractive opportunity, trading at a discount relative to the industry benchmark. With a forward 12-month price-to-sales ratio of 1.43, which is below the five-year industry average of 1.71, the stock offers compelling value for investors seeking exposure to the sector. It currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Estimate Revisions Favor BURL Stock
The Zacks Consensus Estimate for EPS has been revised upward, reflecting the positive sentiment around Burlington. Over the past 60 days, analysts have increased their estimates for the current financial year by 21 cents to $7.91 per share and the next financial year by 25 cents to $9.55. These estimates indicate year-over-year growth of 30.5% and 20.7%, respectively.
The Zacks Consensus Estimate for the current and next year’s sales is pegged at $10.71 billion and $11.80 billion, indicating year-over-year growth of 10.1% and 10.2%, respectively.
Investors may consider the BURL stock due to its strong performance and growth initiatives that have positioned the company well in the retail market. With a focus on enhancing merchandising capabilities, optimizing operations and expanding its store footprint, Burlington has consistently outperformed industry benchmarks.
The stock's recent upward trend, supported by technical indicators and positive market sentiment, reflects investor confidence in the company's financial health and growth potential. Burlington's attractive valuation, along with upward revisions in earnings estimates, suggest a compelling opportunity for investors looking to capitalize on the retail sector's growth. It currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
We have highlighted three other top-ranked stocks in the broader sector, namely Abercrombie & Fitch Co. (ANF - Free Report) , Costco Wholesale Corporation (COST - Free Report) and Ross Stores (ROST - Free Report) .
The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings indicates growth of 13% and 63.4%, respectively, from the year-ago reported figures. Abercrombie has a trailing four-quarter earnings surprise of 27.9%, on average.
Costco Wholesale, which operates membership warehouses, currently carries a Zacks Rank #2. COST has a trailing four-quarter earnings surprise of 2.02%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings suggests growth of 7.2% and 10.2%, respectively, from the year-ago reported numbers.
Ross Stores, one of the largest off-price apparel and home fashion chains, currently carries a Zacks Rank #2. ROST has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings calls for growth of 4.4% and 11.5%, respectively, from the year-ago reported numbers.
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BURL Stock Falls 9% From 52-Week High: Thinking of Buying the Dip?
Burlington Stores, Inc. (BURL - Free Report) shares are currently trading 8.7% below the 52-week high of $282.49 reached on Aug. 29, 2024, making investors contemplate their next moves. Over the past six months, the BURL stock has gained 45.1%, outperforming the Zacks Retail-Discount Stores industry’s 14.1% growth. As the market fluctuates and the holiday season approaches, the question is whether you should buy, hold or sell the BURL stock.
The company’s initiatives, including enhancing merchandising capabilities and optimizing store operations, have supported it to outperform the broader Retail-Wholesale sector and the S&P 500 index’s respective growth of 14.7% and 16.9% in the same period.
Image Source: Zacks Investment Research
BURL, a nationally recognized off-price retailer, closed Friday’s trading session at $257.78. The stock is trading above its 200-day and 100-day simple moving averages of $225.85 and $252.76, respectively, highlighting a continued uptrend.
Image Source: Zacks Investment Research
BURL's Remarkable Growth Strategies are Driving Success
Burlington is experiencing strong growth by providing high-quality merchandise at competitive prices. The company’s growth strategy emphasizes rapid store expansion, operational efficiency and robust inventory management, all of which are crucial for solidifying its market presence. Burlington's continuous investment in its supply chain enhances its potential for long-term growth.
In the second quarter of fiscal 2024, BURL achieved an impressive 13.4% year-over-year increase in total sales, outpacing 9% growth in the prior-year quarter. This success was primarily driven by the addition of 36 stores, raising the total to 1,057. The company is set to open another 100 stores and relocate 30 by the end of fiscal 2024.
Comparable store sales increased by a healthy 5%, exceeding the company's expectations of flat to 2% growth. This strong performance was fueled by a 7% rise in full-price sales and a decrease in markdowns during the quarter. Despite concerns about potential cannibalization from new stores, Burlington's commitment to merchandising excellence and improved customer engagement helped it sustain its sales momentum.
The company’s operating margin expanded by 160 basis points, benefiting from an enhanced gross margin and supply-chain efficiencies. The gross margin improved by 110 basis points to 42.8%, driven by quicker inventory turnover and fewer markdowns.
Burlington’s Optimistic Outlook for FY24
BURL has updated its fiscal 2024 guidance and made it more optimistic. Total sales are expected to grow 9-10%, an increase from the previously stated 8-10%. Comparable store sales are projected to increase 2-3%, improving from the earlier mentioned 0-2%.
The adjusted EBIT margin is expected to rise 50-70 basis points, higher than the previously mentioned 40-60 basis points. Adjusted earnings per share (EPS) are anticipated between $7.66 and $7.96, up from the earlier stated $7.35-$7.75.
For the fiscal third quarter, Burlington forecasts total sales growth of 10-12%, with comparable sales growth of 0-2% and an adjusted EBIT margin improvement of 60-80 basis points. In the fiscal fourth quarter, comparable sales are expected to either remain flat or increase by up to 2%, with total sales growth anticipated at 5-7%.
Is Burlington a Value Play Stock?
From a valuation perspective, the stock presents an attractive opportunity, trading at a discount relative to the industry benchmark. With a forward 12-month price-to-sales ratio of 1.43, which is below the five-year industry average of 1.71, the stock offers compelling value for investors seeking exposure to the sector. It currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Estimate Revisions Favor BURL Stock
The Zacks Consensus Estimate for EPS has been revised upward, reflecting the positive sentiment around Burlington. Over the past 60 days, analysts have increased their estimates for the current financial year by 21 cents to $7.91 per share and the next financial year by 25 cents to $9.55. These estimates indicate year-over-year growth of 30.5% and 20.7%, respectively.
The Zacks Consensus Estimate for the current and next year’s sales is pegged at $10.71 billion and $11.80 billion, indicating year-over-year growth of 10.1% and 10.2%, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Final Thought
Investors may consider the BURL stock due to its strong performance and growth initiatives that have positioned the company well in the retail market. With a focus on enhancing merchandising capabilities, optimizing operations and expanding its store footprint, Burlington has consistently outperformed industry benchmarks.
The stock's recent upward trend, supported by technical indicators and positive market sentiment, reflects investor confidence in the company's financial health and growth potential. Burlington's attractive valuation, along with upward revisions in earnings estimates, suggest a compelling opportunity for investors looking to capitalize on the retail sector's growth. It currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
We have highlighted three other top-ranked stocks in the broader sector, namely Abercrombie & Fitch Co. (ANF - Free Report) , Costco Wholesale Corporation (COST - Free Report) and Ross Stores (ROST - Free Report) .
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings indicates growth of 13% and 63.4%, respectively, from the year-ago reported figures. Abercrombie has a trailing four-quarter earnings surprise of 27.9%, on average.
Costco Wholesale, which operates membership warehouses, currently carries a Zacks Rank #2. COST has a trailing four-quarter earnings surprise of 2.02%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings suggests growth of 7.2% and 10.2%, respectively, from the year-ago reported numbers.
Ross Stores, one of the largest off-price apparel and home fashion chains, currently carries a Zacks Rank #2. ROST has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings calls for growth of 4.4% and 11.5%, respectively, from the year-ago reported numbers.