It has been about a month since the last earnings report for Burlington Stores, Inc. (BURL - Free Report) . Shares have added about 3.9% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is BURL due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Burlington Stores Beats on Q1 Earnings, Raises View
Burlington Stores commenced fiscal 2018 on an upbeat note posting positive earnings and sales surprises for the second quarter in row. The impressive performance prompted management to lift fiscal 2018 view.
The company delivered adjusted earnings of $1.26 per share that outpaced the Zacks Consensus Estimate of $1.09 and surged 59% from the prior-year period. Higher sales, margin expansion, cost control, share repurchase activity and lower tax rates led to the improvement.
Net sales came in at $1,518.4 million, increasing 12.8% year over year. The reported figure surpassed the consensus mark of $1,496 million. The company’s beauty business remained strong and likely to remain one of the key growth drivers.
New and non-comparable stores contributed $82 million to sales. Comparable store sales (comps) rose 4.8% in the quarter, marking the 21st consecutive quarter of growth driven by increase in traffic count. Management informed that new and non-comp outlets contributed $82 million to the sales.
Gross margin increased about 35 basis points to 41.2% buoyed by improved merchandise margin, partially offset by rise in freight costs that negatively impacted the margin by 20 basis points. Management expects freight costs to be up 20 basis points.
Adjusted operating income increased 26.3% to $119.8 million, while adjusted operating margin (as a percentage of net sales) grew 90 basis points to 7.9%. Adjusted EBITDA was up 20.5% to $164.9 million, while adjusted EBITDA margin, as a percentage of sales, expanded 70 basis points to 10.9% on account of higher gross margin and expense leverage.
During the quarter, the company opened 18 net new stores and plans to open 35 to 40 net new stores and remodel 34 stores in fiscal 2018.
Other Financial Aspects
Burlington Stores ended the quarter with cash and cash equivalents of $83 million, long-term debt of $1,122.6 million and shareholders’ equity of $111.3 million. For fiscal 2018, the company continues to project net capital expenditures of approximately $250 million. During the quarter, the company bought back 488,468 shares worth $64 million. At the end of the quarter, the company still had $153 million remaining under its share buyback program.
For fiscal 2018, management expects total sales to increase in the band of 9.7-10.5%, excluding the impact of 53rd week in 2017. Comps growth is anticipated in the range of 2.6-3.4% compared with the prior year’s growth of 3.4%. The company now envisions fiscal 2018 adjusted earnings in the range of $5.90-$6.00 per share, up from its earlier projection of $5.73-$5.83.
Management anticipates adjusted EBITDA margin to increase 30-40 basis points, while expects adjusted operating margin to expand 20-30 basis points.
The company expects second-quarter sales to increase in the band of 8-9% with comps growth of 2-3% compared with 3.5% increase witnessed in the year-ago period. The company forecasts adjusted earnings in the range of 91-95 cents a share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. There have been five revisions higher for the current quarter.
Burlington Stores, Inc. Price and Consensus
At this time, BURL has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise BURL has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.