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Burlington Hits New 52 Week High: Is There More Room to Run?

Zacks Equity Research

Burlington Stores, Inc. BURL hits new 52-week high of $230.7, before closing the session a tad lower at $228.03 on Dec 31. Shares of the New Jersey-based company have rallied 17.8% in the past three months compared with the industry’s growth of 6.2%.

Burlington has been benefitting from its robust growth endeavors, which also aided its third-quarter fiscal 2019 results released in November 2019. Notably, both top and bottom lines continued to improve year over year, and the latter marked its second consecutive beat.

To top it, management raised the fiscal 2019 view. Burlington now envisions adjusted earnings of $7.28-$7.33 per share, suggesting an improvement from $6.44 reported in the prior year. The company had earlier forecast earnings between $7.14 and $7.22 per share.

 

 

Analysts remain bullish on the stock. Over the past 60 days, the Zacks Consensus Estimate for the company’s earnings has been revised 1.7% upward to $7.34 for fiscal 2019. Additionally, the stock’s VGM Score of A and long-term earnings growth rate of 15.7% reflect its inherent strength.

Will the Uptrend Continue?

Burlington made multiple changes to the business model to adapt to the changing retail ecosystem. It is now focusing on the “open to buy” off-price model, which is helping customers to get nationally branded, fashionable, high-quality and right-priced products. As part of the transformation, the company increased vendor counts, made technological advancements, initiated better marketing approach and focused on localized assortments.

Regarding the company’s marketing endeavors, it is experiencing favorable results from its multichannel engagement strategy. Such endeavors are likely to augment top-line growth in the near term.

Notably, the company’s top line has been performing well for a while. In the third quarter of fiscal 2019, net sales advanced 8.6% year over year to $1,774.9 million, driven by healthy comparable store sales performance. We note that comps rose 2.7% in the reported quarter, marking the 27th successive quarter of growth.

In fiscal 2019, total sales are anticipated to increase 8.8-9.1%, with 2.1-2.4% growth in comparable store sales. Also, the company estimates 9-10% rise in total sales for the fiscal fourth quarter. Comparable store sales are envisioned to improve 2-3%, whereas Burlington registered a 1.3% increase in the year-ago period.

Moreover, the company is gradually expanding its store fleet. In this regard, the company plans to open 51 net new stores and remodel 28 stores in fiscal 2019. These apart, the Zacks Rank #3 (Hold) company is working toward improving operating margin by augmenting sales, optimizing markdowns and effectively managing inventory.

Wrapping Up

All said, we expect the company’s robust prospects to help it keep the stellar show on.

Key picks

Target Corporation TGT has a long-term earnings growth rate of 7.6%. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation DG has an expected long-term earnings growth rate of 11.4%. It currently carries a Zacks Rank #2 (Buy).

Costco Wholesale Corporation COST, also a Zacks Rank #2 stock, has an expected long-term earnings growth rate of 8.1%.

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Target Corporation (TGT) : Free Stock Analysis Report
 
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