U.S. Markets closed

Burlington Stores Up More Than 20% in 6 Months: Here's Why

Zacks Equity Research

Burlington Stores, Inc. BURL has emerged as an investor favorite, courtesy of sound fundamentals and growth efforts. We note that shares of this NJ-based company have advanced 23.5% in the past six months compared with the industry’s growth of 17.8%. This Zacks Rank #2 (Buy) stock has also comfortably outperformed the Retail-Wholesale sector and the S&P 500 Index that declined 1.7% and 0.3%, respectively, in the said period.

In an ever-evolving retail landscape, Burlington Stores has made multiple changes to its business model to stay relevant. The company has steadily increased vendor counts, made technological advancements, improved its marketing approach and focused on localized assortments. All these endeavors have helped the company to post decent comparable sales, and in turn fueled its top-line performance.

We note that comparable store sales rose 3.8% in second-quarter fiscal 2019 compared with increase of 2.9% in the year-ago period and 0.1% in the preceding quarter. This was the 26th successive quarter of comparable store sales growth. Management now expects comparable store sales to improve 2-3% in the third quarter and 2-2.5% during fiscal 2019.



 

The company has been doing quite well on the revenue front. Its revenues have not only outpaced estimates in 11 out of the 14 trailing quarters but have also shown constant improvement over the past few quarters. In the second quarter of fiscal 2019, the top line grew 10.5%, following an increase of 7.3% in the preceding quarter. Management now expects total sales to improve 8.5-9.5% in the third quarter and 8.8-9.3% during fiscal 2019.

Burlington Stores, which started business as a coat-focused off-price retailer, is focusing on “open to buy” off-price model. The current model is helping customers to get nationally branded, fashionable, high quality and rightly priced products.

The company is concentrating on underpenetrated categories, particularly home, beauty and gifts, in order to make business less weather sensitive. In fact, the company is reaping the benefits of its multichannel engagement strategy, which is evident from its favorable results. Moreover, it is gradually expanding its store fleet. The company intends to improve operating margin and lower the gap of the same compared with its peers by augmenting sales, optimizing markdowns and effectively managing inventory.

3 Picks You Can’t Miss Out On

Target TGT delivered average positive earnings surprise of 4.6% in the trailing four quarters. It carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Costco COST has a long-term earnings growth rate of 8.5% and a Zacks Rank #2.

Dollar General DG has a long-term earnings growth rate of 9.6% and a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
Dollar General Corporation (DG) : Free Stock Analysis Report
 
Target Corporation (TGT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research