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Burlington (BURL) Stock Up 41% in 3 Months: How to Play Ahead?
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Burlington Stores, Inc. (BURL - Free Report) has experienced a remarkable jump in its stock price over the past three months. The stock has rallied 39.6%, comfortably outpacing the Zacks Retail-Discount Stores industry’s modest 11.4% rise.
The rise in stock price can be attributed to the Burlington 2.0 initiative, which focuses on an off-price model with enhanced marketing, better merchandising and efficient inventory management, It has also helped the company to outperform the broader Retail-Wholesale sector and the S&P 500 Index’s respective growth of 4.3% and 10% in the same period. The company is opening smaller, cost-effective stores and acquiring Bed Bath & Beyond leases for expansion.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $252.25 on Jul 22, the BURL stock is inching toward its 52-week high of $255.80 attained on Jul 12, 2024, thus reflecting strong investor confidence and market optimism about the retailer's future.
Technical indicators are supportive of Burlington’s strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in Burlington’s financial health and prospects.
From a valuation perspective, the stock presents an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 29.94, which is below the five-year high of 34.31 and the industry’s average of 30.30, the stock offers compelling value for investors seeking exposure to the sector. The stock currently has a Value Score of B, further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Tailwinds
The company is undergoing a significant transformation with its Burlington 2.0 initiative, which focuses on an off-price model. This strategy includes enhanced marketing to effectively convey the off-price message and investments in merchandising to optimize operations and drive growth. The strategic acquisition of Bed Bath & Beyond leases, while initially impacting earnings, is now offering opportunities for store expansion and potential revenue growth.
In the first quarter of fiscal 2024, Burlington saw a notable 10.5% increase in total sales compared with the previous year, demonstrating the effectiveness of its market strategies and growing customer base. Comparable store sales rose 2%, thereby hitting the higher end of the company's guidance.
Additionally, effective inventory management and improved supply-chain efficiency have resulted in significant margin expansion, with the company's EBIT margin increasing 170 basis points and the gross margin reaching 43.5% in the first quarter.
Growth Prospects
Burlington has set ambitious long-term growth targets, aiming to grow its sales to $16 billion and operating income to $1.6 billion within the next five years. These targets would nearly triple its fiscal 2023 operating profit, highlighting the company’s strategic vision and confidence in executing its growth plans. For the current fiscal year, BURL expects total sales to increase 9.3% year over year and the adjusted earnings per share (EPS) to grow 25%. This demonstrates its commitment to robust financial performance.
The company is also focusing on strategic expansion with store openings, having added 14 stores in the first quarter of fiscal 2024, thus bringing the total to 1,021 stores. Burlington plans to open 100 stores in fiscal 2024, reflecting its focus on expanding its physical footprint. This expansion is expected to drive sales growth and enhance market penetration.
Estimate Revision Favoring the Stock
The Zacks Consensus Estimate for EPS has seen upward revisions, reflecting positive sentiments around Burlington. Over the past 30 days, analysts have increased their estimates for the current and next fiscal year by 3.7% to $7.60 and 3% to $9.33 per share, respectively, indicating year-over-year growth of 25.4% and 22.7%.
Wrapping Up
Investors should consider investing in Burlington stock due to its strategic initiatives, which emphasize an off-price model and improved marketing, thereby driving robust sales growth and profitability. The company's strong customer base, ambitious long-term growth targets and strategic store expansions indicate substantial growth potential.
Effective inventory management and supply-chain efficiency improvements further solidify Burlington's market position and operational strength. Additionally, the positive market sentiment and upward earnings revisions reflect confidence in its continued success and potential for gains. Burlington currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Urban Outfitters Inc. (URBN - Free Report) .
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It 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 Gap’s fiscal 2024 earnings and sales indicates growth of 22.4% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1, at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.
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Burlington (BURL) Stock Up 41% in 3 Months: How to Play Ahead?
Burlington Stores, Inc. (BURL - Free Report) has experienced a remarkable jump in its stock price over the past three months. The stock has rallied 39.6%, comfortably outpacing the Zacks Retail-Discount Stores industry’s modest 11.4% rise.
The rise in stock price can be attributed to the Burlington 2.0 initiative, which focuses on an off-price model with enhanced marketing, better merchandising and efficient inventory management, It has also helped the company to outperform the broader Retail-Wholesale sector and the S&P 500 Index’s respective growth of 4.3% and 10% in the same period. The company is opening smaller, cost-effective stores and acquiring Bed Bath & Beyond leases for expansion.
This impressive uptick has left many investors wondering if they missed out on a lucrative opportunity or if there is still potential for growth. Closing at $252.25 on Jul 22, the BURL stock is inching toward its 52-week high of $255.80 attained on Jul 12, 2024, thus reflecting strong investor confidence and market optimism about the retailer's future.
Technical indicators are supportive of Burlington’s strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in Burlington’s financial health and prospects.
From a valuation perspective, the stock presents an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 29.94, which is below the five-year high of 34.31 and the industry’s average of 30.30, the stock offers compelling value for investors seeking exposure to the sector. The stock currently has a Value Score of B, further validating its appeal.
Image Source: Zacks Investment Research
Decoding the Tailwinds
The company is undergoing a significant transformation with its Burlington 2.0 initiative, which focuses on an off-price model. This strategy includes enhanced marketing to effectively convey the off-price message and investments in merchandising to optimize operations and drive growth. The strategic acquisition of Bed Bath & Beyond leases, while initially impacting earnings, is now offering opportunities for store expansion and potential revenue growth.
In the first quarter of fiscal 2024, Burlington saw a notable 10.5% increase in total sales compared with the previous year, demonstrating the effectiveness of its market strategies and growing customer base. Comparable store sales rose 2%, thereby hitting the higher end of the company's guidance.
Additionally, effective inventory management and improved supply-chain efficiency have resulted in significant margin expansion, with the company's EBIT margin increasing 170 basis points and the gross margin reaching 43.5% in the first quarter.
Growth Prospects
Burlington has set ambitious long-term growth targets, aiming to grow its sales to $16 billion and operating income to $1.6 billion within the next five years. These targets would nearly triple its fiscal 2023 operating profit, highlighting the company’s strategic vision and confidence in executing its growth plans. For the current fiscal year, BURL expects total sales to increase 9.3% year over year and the adjusted earnings per share (EPS) to grow 25%. This demonstrates its commitment to robust financial performance.
The company is also focusing on strategic expansion with store openings, having added 14 stores in the first quarter of fiscal 2024, thus bringing the total to 1,021 stores. Burlington plans to open 100 stores in fiscal 2024, reflecting its focus on expanding its physical footprint. This expansion is expected to drive sales growth and enhance market penetration.
Estimate Revision Favoring the Stock
The Zacks Consensus Estimate for EPS has seen upward revisions, reflecting positive sentiments around Burlington. Over the past 30 days, analysts have increased their estimates for the current and next fiscal year by 3.7% to $7.60 and 3% to $9.33 per share, respectively, indicating year-over-year growth of 25.4% and 22.7%.
Wrapping Up
Investors should consider investing in Burlington stock due to its strategic initiatives, which emphasize an off-price model and improved marketing, thereby driving robust sales growth and profitability. The company's strong customer base, ambitious long-term growth targets and strategic store expansions indicate substantial growth potential.
Effective inventory management and supply-chain efficiency improvements further solidify Burlington's market position and operational strength. Additionally, the positive market sentiment and upward earnings revisions reflect confidence in its continued success and potential for gains. Burlington currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Urban Outfitters Inc. (URBN - Free Report) .
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It 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 Gap’s fiscal 2024 earnings and sales indicates growth of 22.4% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1, at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.