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Factors Influencing Burlington Stores (BURL) in Q1 Earnings

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Burlington Stores, Inc. (BURL - Free Report) is expected to report first-quarter fiscal 2018 results on May 24. The question that arises is will this retailer of branded apparel products be able to maintain its earnings beat streak in the to-be reported quarter?

The Bottom-Line Story

Notably, the company’s earnings have outpaced the Zacks Consensus Estimate for 17 straight quarters now, with a trailing four-quarter average of 15%. The Zacks Consensus Estimate for the quarter under review stands at $1.09, reflecting year-over-year growth of 49.3%. The consensus estimate is at the high end of the company’s guided range of $1.05-$1.09. We note that the Zacks Consensus Estimate has risen by a penny in the last 30 days.

Let’s delve deeper to determine the factors that are likely to have a bearing on the company’s first-quarter results.

Burlington Stores, Inc. Price, Consensus and EPS Surprise

 

Burlington Stores, Inc. Price, Consensus and EPS Surprise | Burlington Stores, Inc. Quote

Factors at Play

Sound Fundamentals Drive Margins

Burlington Stores has implemented multiple changes on its business model to resonate well with the changes in the industry. Impressively, the company’s current model is helping customers to get nationally branded, fashionable, high quality and fair priced products. Furthermore, it has increased vendor count, made technological advancements, initiated a better marketing approach and focused on localized assortments. Apart from this, in order to drive the top line, Burlington Stores has been concentrating on store expansion.

These factors along with effective inventory management and cost containment have helped drive the gross margin, which has shown consistent improvement in the last few years. Additionally, gross margin expanded 80, 110, 100 and 20 basis points to 40.9%, 40.7%, 42.2% and 42%, respectively, in the first, second, third and fourth quarters of fiscal 2017.

Top Line Gains on Sturdy Comps

Apart from having a robust earnings history, Burlington Stores has been doing well on the revenue front. Evidently, the company’s top line has outpaced the consensus mark in four of the trailing six quarters and has also shown constant improvement over the past few quarters. Management had earlier projected sales within 9.5% to 10.5% for the first quarter of fiscal 2018. For the first quarter, analysts polled by Zacks expect revenues of $1.50 billion, up from $1.35 billion a year ago.

Additionally, amid a competitive retail backdrop, Burlington Stores’ comparable-store sales (comps) have improved consistently over the past few years. In fact, the momentum continued in fiscal 2017 as well, with the first, second, third and fourth quarters witnessing growth of 0.5%, 3.5%, 3.1% and 5.9%, respectively. For the first quarter, comps are expected to grow in the 2-3% range. Meanwhile, analysts polled by Zacks expect comps growth of 3.3%.

What the Zacks Model Say?

Our proven model shows that Burlington Stores is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Burlington Stores has an Earnings ESP of +0.69% and a Zacks Rank #3.

Other Stocks Poised to Beat Earnings

Here are a few other companies you may want to consider as our model shows that these too have the right combination of elements to post earnings beat.

Deckers Outdoor Corporation (DECK - Free Report) has an Earnings ESP of +23.37% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +1.39% and a Zacks Rank #3.

Kroger (KR - Free Report) has an Earnings ESP of +3.94% and a Zacks Rank #3.

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