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Why Is Burlington Stores (BURL) Up 0.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Burlington Stores (BURL - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Burlington Stores 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 Q3 Earnings Beat Estimates, Gross Margin Up Y/Y
Burlington Stores has reported third-quarter fiscal 2024 results, wherein sales lagged the Zacks Consensus Estimate and earnings beat the same. Also, both top and bottom lines grew year over year.
More on Burlington Stores’ Q3 Financial Results
Burlington Stores reported adjusted earnings of $1.55 per share, which surpassed the Zacks Consensus Estimate of $1.54. The bottom line rose 58.2% from 98 cents in the year-ago quarter. Excluding the acquisition of Bed Bath & Beyond leases, earnings were $1.55 per share compared with $1.10 in the year-ago period.
Total sales of $2,530.7 million increased 10.5% from the prior-year quarter and missed the Zacks Consensus Estimate of $2,562 million. The company’s comparable store sales jumped 1% from the year-ago period. Net sales were $2,526.2 million and other revenues were $4.5 million.
Insight Into Margins
The gross margin was 43.9%, up 70 basis points (bps) from third-quarter fiscal 2023. The merchandise margin expanded 50 bps due to lower markdowns and higher markup. Freight expenses improved 20 bps year over year.
Adjusted selling, general and administrative (SG&A) expenses rose 9.2% year over year to $680 million. Adjusted SG&A expenses, as a rate of net sales, was 26.9%, down 40 bps from third-quarter fiscal 2023.
Product sourcing costs were $210 million, up from $200 million in the year-ago quarter.
Adjusted EBITDA increased 30.3% from the third quarter of fiscal 2023 to $228.8 million. Adjusted EBITDA margin increased 140 bps to 9.1%. Adjusted EBIT was $141.3 million, up 42.1% from $99.5 million in the year-ago quarter. Adjusted EBIT margin was 5.6%, up 120 bps from the year-ago quarter.
Financial Snapshot: Cash, Debt and Equity Overview
The company ended the reported quarter with cash and cash equivalents of $857.8 million, long-term debt of $1.54 billion and stockholders’ equity of $1.15 billion. Burlington Stores exited the fiscal third quarter with $1.71 billion of liquidity, including $858 million of unrestricted cash and $847 million available under its ABL facility.
Burlington Stores ended the quarter with $1.71 billion of outstanding total debt, comprising $1.24 billion under its term-loan facility, $453 million of convertible notes and no borrowings under the company’s ABL facility.
The company bought back 213,372 shares for $56 million under its share repurchase plan in the fiscal third quarter. As of Nov. 2, 2024, Burlington had $325 million remaining under its current share repurchase authorization.
Fiscal 2024 Guidance
For the fiscal fourth quarter, the company anticipates a 5-7% increase in total sales. This prediction is based on an expected 0-2% increase in comparable store sales from the year-ago quarter. Adjusted EBIT margin is expected to improve 50-80 bps year over year in the fourth quarter.
Moreover, it forecasts adjusted EPS to be in the range of $3.55-$3.75 compared with $3.69 (which excludes $4 million, net of tax, of expenses related to the acquired Bed Bath & Beyond leases) in the year-ago period.
The company gave its fiscal 2024 predictions, where total sales are expected to increase in the band of 9-10%. Comparable store sales are now expected to grow in the range of 2-4%, an improvement from the previous estimate of 2-3%, indicating stronger expected performance at individual stores. In terms of profitability, adjusted EBIT margin is anticipated to increase in the band of 60-70 bps, which is slightly more favorable than the previous estimated range of 50-70 bps.
The forecast for adjusted EPS has also been revised upward and is now expected to be in the range of $7.76-$7.96 compared with the earlier estimate of $7.66-$7.96. This indicates stronger overall profitability. Both predictions exclude expenses associated with the acquired Bed Bath & Beyond leases.
In fiscal 2024, management intends a capital expenditure, net of landlord allowances, of $750 million. The company intends to open 101 net new stores in fiscal 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Burlington Stores has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Burlington Stores has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Burlington Stores belongs to the Zacks Retail - Discount Stores industry. Another stock from the same industry, Target (TGT - Free Report) , has gained 1.8% over the past month. More than a month has passed since the company reported results for the quarter ended October 2024.
Target reported revenues of $25.67 billion in the last reported quarter, representing a year-over-year change of +1.1%. EPS of $1.85 for the same period compares with $2.10 a year ago.
For the current quarter, Target is expected to post earnings of $2.14 per share, indicating a change of -28.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Target. Also, the stock has a VGM Score of B.
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Why Is Burlington Stores (BURL) Up 0.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Burlington Stores (BURL - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Burlington Stores 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 Q3 Earnings Beat Estimates, Gross Margin Up Y/Y
Burlington Stores has reported third-quarter fiscal 2024 results, wherein sales lagged the Zacks Consensus Estimate and earnings beat the same. Also, both top and bottom lines grew year over year.
More on Burlington Stores’ Q3 Financial Results
Burlington Stores reported adjusted earnings of $1.55 per share, which surpassed the Zacks Consensus Estimate of $1.54. The bottom line rose 58.2% from 98 cents in the year-ago quarter. Excluding the acquisition of Bed Bath & Beyond leases, earnings were $1.55 per share compared with $1.10 in the year-ago period.
Total sales of $2,530.7 million increased 10.5% from the prior-year quarter and missed the Zacks Consensus Estimate of $2,562 million. The company’s comparable store sales jumped 1% from the year-ago period. Net sales were $2,526.2 million and other revenues were $4.5 million.
Insight Into Margins
The gross margin was 43.9%, up 70 basis points (bps) from third-quarter fiscal 2023. The merchandise margin expanded 50 bps due to lower markdowns and higher markup. Freight expenses improved 20 bps year over year.
Adjusted selling, general and administrative (SG&A) expenses rose 9.2% year over year to $680 million. Adjusted SG&A expenses, as a rate of net sales, was 26.9%, down 40 bps from third-quarter fiscal 2023.
Product sourcing costs were $210 million, up from $200 million in the year-ago quarter.
Adjusted EBITDA increased 30.3% from the third quarter of fiscal 2023 to $228.8 million. Adjusted EBITDA margin increased 140 bps to 9.1%. Adjusted EBIT was $141.3 million, up 42.1% from $99.5 million in the year-ago quarter. Adjusted EBIT margin was 5.6%, up 120 bps from the year-ago quarter.
Financial Snapshot: Cash, Debt and Equity Overview
The company ended the reported quarter with cash and cash equivalents of $857.8 million, long-term debt of $1.54 billion and stockholders’ equity of $1.15 billion. Burlington Stores exited the fiscal third quarter with $1.71 billion of liquidity, including $858 million of unrestricted cash and $847 million available under its ABL facility.
Burlington Stores ended the quarter with $1.71 billion of outstanding total debt, comprising $1.24 billion under its term-loan facility, $453 million of convertible notes and no borrowings under the company’s ABL facility.
The company bought back 213,372 shares for $56 million under its share repurchase plan in the fiscal third quarter. As of Nov. 2, 2024, Burlington had $325 million remaining under its current share repurchase authorization.
Fiscal 2024 Guidance
For the fiscal fourth quarter, the company anticipates a 5-7% increase in total sales. This prediction is based on an expected 0-2% increase in comparable store sales from the year-ago quarter. Adjusted EBIT margin is expected to improve 50-80 bps year over year in the fourth quarter.
Moreover, it forecasts adjusted EPS to be in the range of $3.55-$3.75 compared with $3.69 (which excludes $4 million, net of tax, of expenses related to the acquired Bed Bath & Beyond leases) in the year-ago period.
The company gave its fiscal 2024 predictions, where total sales are expected to increase in the band of 9-10%. Comparable store sales are now expected to grow in the range of 2-4%, an improvement from the previous estimate of 2-3%, indicating stronger expected performance at individual stores. In terms of profitability, adjusted EBIT margin is anticipated to increase in the band of 60-70 bps, which is slightly more favorable than the previous estimated range of 50-70 bps.
The forecast for adjusted EPS has also been revised upward and is now expected to be in the range of $7.76-$7.96 compared with the earlier estimate of $7.66-$7.96. This indicates stronger overall profitability. Both predictions exclude expenses associated with the acquired Bed Bath & Beyond leases.
In fiscal 2024, management intends a capital expenditure, net of landlord allowances, of $750 million. The company intends to open 101 net new stores in fiscal 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Burlington Stores has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Burlington Stores has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Burlington Stores belongs to the Zacks Retail - Discount Stores industry. Another stock from the same industry, Target (TGT - Free Report) , has gained 1.8% over the past month. More than a month has passed since the company reported results for the quarter ended October 2024.
Target reported revenues of $25.67 billion in the last reported quarter, representing a year-over-year change of +1.1%. EPS of $1.85 for the same period compares with $2.10 a year ago.
For the current quarter, Target is expected to post earnings of $2.14 per share, indicating a change of -28.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Target. Also, the stock has a VGM Score of B.