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Category: Stock Market and Burlington
Date: 8 September 2019 Stock Price: $200.68 We take a look at the 2nd quarter earnings for their 2019 fiscal year of Burlington Stores Inc. the off-price fashion retailer.
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About Burlington Stores Inc.
Burlington Stores, Inc., headquartered in New Jersey, is a nationally recognized off-price retailer with Fiscal 2018 net sales of $6.6 billion. The Company is a Fortune 500 company and its common stock is traded on the New York Stock Exchange under the ticker symbol “BURL.” The Company operated 691 stores as of the end of the second quarter of Fiscal 2019, inclusive of an internet store, in 45 states and Puerto Rico, principally under the name Burlington Stores. The Company’s stores offer an extensive selection of in-season, fashion-focused merchandise at up to 60% off other retailers' prices, including women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home and coats.
Financial overview of Burlington Stores' latest earnings report
The numbers we are interested in (for the quarter):
- Total Revenue: $1.662 billion (up from $1.504 billion from the same quarter of the previous year)
- Cost of goods sold : $1.566 billion (up from $1.425 billion for the same quarter of the previous year)
- Net income: $84.567 million (up from from $70.957 million for the same quarter of the previous year)
- Diluted earnings per share: $1.26 (up from $1.03 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 67.724 million (up from 68.769 million for the same quarter of the previous year)
- PE ratio: 40 (based on the earnings per share for the current quarter being reported for full fiscal year)
- Cash and cash equivalents: $97.207 million
- Cash and cash equivalents per share: $1.27
- Cash and cash equivalents makes up 0.63% of Burlington Stores current market capital
- Cash and cash equivalents makes up 1.96% of Burlington Stores total assets
- Inventories: $823.787 million (up from $843.926 million for the same quarter of the previous year)
- Inventories makes up 16.3% of Burlington Stores total assets
- Inventories declined by -2.3% over the last year
- Total shareholders' equity of Burlington Stores Inc.: $315.127 million
- Shareholders' equity per share: $4.65
- Accounts receivable: $98.201 million (up from $71.026 million for the same quarter of the previous year)
- Accounts receivable makes up 1.94% of Burlington Stores total assets
- Accounts receivable grew by 38.26% over the last year
- Cash generated from operations: $162.332 million
- Cash generated from operations per share: $2.39
Burlington Stores' management commentary on the results and earnings guidance
BURLINGTON, N.J., Aug. 29, 2019 (GLOBE NEWSWIRE) -- Burlington Stores, Inc. (NYSE: BURL), a nationally recognized off-price retailer of high-quality, branded apparel at everyday low prices, today announced its results for the second quarter ended August 3, 2019.
Tom Kingsbury, CEO, stated, “We are very pleased with our second quarter results, driven by our 3.8% comparable store sales increase and 10.5% overall sales growth, which resulted in a 19% increase in Adjusted EPS, well ahead of our guidance. In addition, based on our disciplined inventory management, our comparable store inventory decreased 7%, putting us in a very good position to take advantage of the abundant values available in the marketplace. I would like to thank our store, supply chain and corporate teams for contributing to these strong results.”
Full Year Fiscal 2019 and Third Quarter 2019 Outlook
For Fiscal 2019 (the 52-weeks ending February 1, 2020), the Company now expects:
For the third quarter of Fiscal 2019 (the 13 weeks ending November 2, 2019), the Company expects:
Tom Kingsbury, CEO, stated, “We are very pleased with our second quarter results, driven by our 3.8% comparable store sales increase and 10.5% overall sales growth, which resulted in a 19% increase in Adjusted EPS, well ahead of our guidance. In addition, based on our disciplined inventory management, our comparable store inventory decreased 7%, putting us in a very good position to take advantage of the abundant values available in the marketplace. I would like to thank our store, supply chain and corporate teams for contributing to these strong results.”
Full Year Fiscal 2019 and Third Quarter 2019 Outlook
For Fiscal 2019 (the 52-weeks ending February 1, 2020), the Company now expects:
- Total sales to increase in the range of 8.8% to 9.3%; this assumes comparable store sales to increase in the range of 2% to 3% for the third and fourth quarters of Fiscal 2019, resulting in a full year comparable store sales increase of 2.0% to 2.5% on top of the 3.2% increase during Fiscal 2018;
- Depreciation and amortization, exclusive of favorable lease costs, to be approximately $210 million;
- Adjusted EBIT margin to be flat to up 10 basis points vs last year;
- Interest expense of approximately $52 million;
- An effective tax rate of approximately 20 to 21%;
- To open 50 net new stores, and invest Net Capital Expenditures of approximately $310 million; and
- Based on second quarter results, Adjusted EPS in the range of $7.14 to $7.22, utilizing an updated fully diluted share count of approximately 67.3 million, as compared to Fiscal 2018 net income per share of $6.04 and Fiscal 2018 Adjusted EPS of $6.44. This outlook excludes an expected $0.05 per share impact of management transition costs.
For the third quarter of Fiscal 2019 (the 13 weeks ending November 2, 2019), the Company expects:
- Total sales to increase in the range of 8.5% to 9.5%;
- Comparable store sales to increase 2% to 3%;
- An effective tax rate of approximately 20 to 21%; and
- Adjusted EPS in the range of $1.37 to $1.41, which assumes a fully diluted share count of approximately 67.1 million, as compared to Fiscal 2018 third quarter net income per share of $1.12 and Fiscal 2018 third quarter Adjusted EPS of $1.21. This outlook excludes an expected $0.02 per share impact of management transition costs.
Burlington Stores Inc (NYSE: BURL) stock price history
The image below shows the stock price history of Burlington Stores Inc. over the last 5 years. And as the image shows its been a pretty good time for the stock with it increasing significantly over the last 5 years. 5 years ago the stock price of Burlington Stores was around $40 a stock and currently its trading at $200.68 a stock. That's 400% growth in the stock price of Burlington Stores Inc over the last 5 years. And no investor will say no to those kinds of returns. The stock is also trading at a lot closer to its 52 week high of $209.36 than it is to its 52 week low of $136.30, which is a clear indication that the short term sentiment and momentum of the stock is positive.
Burlington Stores Inc. (NYSE: BURL) latest stock valuation
So what are Burlington Stores Inc. stock worth based on their latest earnings report? Our valuation models gives a target price (full value price) of $150.30 per Burlington Stores Inc. stock. We therefore feel the group is overvalued and would not recommend fundamental long term or value investors buy into Burlington Stores Inc. at our current target price of $150.30. We recommend looking to buy at 10% below our target price. So a good entry point would be around $135 or below. We expect to see the stock pull back from current levels to closer to our target price in coming weeks and months.