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How Burlington Stores (BURL) Looks Ahead of Q2 Earnings?

Zacks Equity Research
·3 min read

Burlington Stores, Inc. BURL is set to release its second-quarter fiscal 2020 results on Aug 27 before market open. We expect the company to report year-over-year decline in the top and bottom lines in the to-be-reported quarter. In fact, the Zacks Consensus Estimate for the quarter stands at a loss of $1.09, which got wider by 3 cents in the past 30 days. Moreover, the estimate compares unfavorably with earnings per share of $1.36 recorded in the same quarter a year earlier. For quarterly revenues, the consensus estimate is pegged at $1,172 million, suggesting a decline of more than 28% from the year-ago quarter’s tally.

A glimpse at the company’s performance in the trailing four quarters shows that it has reported a negative earnings surprise of 42.6% on average.

Key Factors to Note

Burlington Stores has been grappling with soft margins. In the previous quarter, the inventory charge against aged inventory due to extended store closures significantly hurt gross margin. On its last earnings call, management notified that this charge is anticipated to cover the entire cost of markdowns that are expected to be taken on this aged inventory in fiscal second quarter. Further, we expect the company’s quarterly performance to have borne the brunt of coronavirus. In fact, temporary closures of stores at some point in the quarter are likely to have weighed on performance. A promotional retail backdrop might have been an added deterrent.

Nevertheless, management had earlier cited that it is experiencing higher traffic levels and sales across the reopened stores. This was owing to pent-up demand and customers’ positive response to the company’s clearance strategy. Also, this off-price retailer has been strengthening vendor counts, making technological advancements and focusing on localized assortments. These factors might have provided some cushion to the quarterly performance.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Burlington Stores this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Burlington Stores, Inc. Price and EPS Surprise

Burlington Stores, Inc. Price and EPS Surprise
Burlington Stores, Inc. Price and EPS Surprise

Burlington Stores, Inc. price-eps-surprise | Burlington Stores, Inc. Quote

Although Burlington Stores has an Earnings ESP of +10.99%, its Zacks Rank #4 (Sell) is making surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Big Lots BIG currently has an Earnings ESP of +10.57% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG presently has an Earnings ESP of +9.64% and a Zacks Rank #2.

Ollie’s Bargain Outlet OLLI currently has an Earnings ESP of +8.67% and a Zacks Rank #2.

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Big Lots, Inc. (BIG) : Free Stock Analysis Report
 
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Ollies Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
 
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Zacks Investment Research