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Factors Influencing Burlington Stores (BURL) in Q1 Earnings

Zacks Equity Research

Burlington Stores, Inc. BURL is scheduled to report first-quarter fiscal 2019 results on May 30, before the opening bell. In the last reported quarter, this off-price retailer delivered a positive surprise of 2.2%. Also, the company boasts an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 12.6%.

Let’s see what awaits the stock this quarterly release.

How Are Estimates Faring?

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.26, in line with the year-ago quarter’s reported figure. Notably, the consensus mark has been stable over the past 30 days. For revenues, the consensus estimate stands at $1.62 billion, implying a 6.9% rise from the year-earlier quarter’s reported number.

Burlington Stores, Inc. Price and EPS Surprise

Burlington Stores, Inc. Price and EPS Surprise

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

Factors That Hold Key to Burlington Stores’ Performance

Burlington Stores is poised on enhancement of assortments with its primary focus on the underpenetrated categories, particularly home, beauty and gifts. This apart, its marketing endeavors and store fleet expansion bode well. Further, the company intends to improve its operating margin and lower the gap of the same compared with its peers by augmenting sales, optimizing markdowns, effectively managing inventory and focusing on SG&A expenses. Such well-chalked out plans might aid the company’s results in the fiscal first quarter.

Moreover, the company has been witnessing robust top-line growth for a while now along with a solid comparable sales performance. In fact, the company achieved its 24th successive quarter of positive comparable store sales growth in fourth-quarter fiscal 2018. Going forward, the company expects first-quarter sales to increase 7-9% with comparable store sales growth likely to be flat to up 2%. Management also envisions adjusted earnings of $1.21-$1.31 per share compared with $1.26 reported in the year-ago period.

Additionally, its intensified concentration on its omnichannel marketing strategies, such as television campaigns and direct to consumer are expected to boost traffic that could positively impact the top-line results in the to-be-reported quarter.

However, the company is reeling under elevated freight costs. Due to this, gross margin during the fourth quarter of fiscal 2018 was to an extent affected by 20 basis points. Management expects freight costs to adversely impact the company’s margin by roughly 25 basis points in the first quarter.

What the Model Says

The proven Zacks model does not conclusively show that Burlington Stores is likely to beat estimates in first-quarter fiscal 2019. This is because a stock needs to have — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) as well as a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Burlington Stores has a Zacks Rank #3, which increases the predictive power of ESP, but its Earnings ESP of -0.08% in the combination leaves surprise prediction inconclusive for the stock this reporting cycle.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to beat on earnings in the upcoming releases.

Abercrombie & Fitch Co. ANF has an Earnings ESP of +0.26% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation DG has an Earnings ESP of +2.13% and a Zacks Rank of 2.

Costco Wholesale Corporation COST has an Earnings ESP of +2.10% and a Zacks Rank of 3.

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