URI vs. SSD: Which Stock Should Value Investors Buy Now?
Have you been paying attention to shares of Burlington Stores BURL? Shares have been on the move with the stock up 9.7% over the past month. BURL hit a new 52-week high of $140.15 in the previous session. Burlington Stores has gained 12.2% since the start of the year compared to the 4.4% move for the Retail-Wholesale sector and the 5.2% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on March 8, 2018, Burlington Stores reported EPS of $2.17 versus the Zacks Consensus Estimate of $2.09 while it beat the consensus revenue estimate by 2.92%.
For the current fiscal year, Burlington Stores is expected to post earnings of $5.76 per share on $6.6 billion in revenues. This represents a 31.81% change in EPS on an 8.5% change in revenues. For the next fiscal year, the company is expected to earn $6.74 per share on $7.16 billion in revenues. This represents a year-over-year change of 16.93% and 8.42%, respectively.
Burlington Stores may be at a 52-week high right now, but what might the future hold for BURL? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Burlington Stores has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 23.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 18.6X versus its peer group's average of 15.99X. Additionally, the stock has a PEG ratio of 1.30. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Burlington Stores, Inc. Price and Consensus
Burlington Stores, Inc. Price and Consensus | Burlington Stores, Inc. Quote
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Burlington Stores currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Burlington Stores passes the test. Thus, it seems as though BURL shares could have a bit more room to run in the near term.
How Does Burlington Stores Stack Up to the Competition?
Shares of Burlington Stores have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Dollar General Corporation DG, Dillard's DDS, and ASOS PLS ADR ASOMY, all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 38% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BURL, even beyond its own solid fundamental situation.
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