This is just a ratio which usually doesnt indicate how much value a stock is supposed to have. Although, I sometimes use it to pick some stocks which gives me some chance of gaining value. Hence, some stocks are percieved to be undervalued using the PE ratio, in the stocks sector, by the typical investor, which I must admit I am the typical investor(I hope):-)
In regards to an earlier post about the company being undervalued. Looking at the PE, at the close today it was 16.83. The industry average for its sector is 19.9. With estimated earnings for year end of $1.42, if BKE had the industry average PE the stock would be at $28.25. For this reason and others stated by other posters, the stock should be perceived as undervalued. I say perceived because with this market fundamentals alone don't always do a stock justice. Just look at Amazon.com and some other internet stocks that have never turned a profit but their stock prices are outragous.
The real downside damage has already been done. BKE got killed with the rest of the retail sector and particularly the teen retailers(WTSLA, GADZ, etc.). BKE is a fundamentally solid, growing company with great ROE. IMO BKE's fair value is low 30s.
All of the things you say are true.............except
for the statement of regionally located with less competition. Actually, their best perfoming stores are located where there is major competition such as the Gap, etc. They are cash rich and proceed with aggressiveness. What really, in my opinion, makes this company a leader of the retail sector is their means of restocking inventory. They wharehouse little to no real inventory. When an item is purchase at any given store, that scan automatically reorders to the home office and intern is ordered directly from the manufacturer. The entire reorder process takes two days. In fact, if one store is out of a particular item, another store will fulfill that item depletion the next day. If any of the big hitters of the industry really knew how BKE's system is opperated, they would try to duplicate it. I think this is a solid company to own. Good Luck
My guess is the stock went up for alot of the same reasons it has been beaten up by lately- emotions. The overall market rally has helped as has the recent run up of other retail stocks. There was also a good write up on BKE on the Motley Fool site over the weekend. It is a company with good fundamentals and it should be trading in the mid 20's IMO. Out.