Burlington Stores, Inc. (NYSE:BURL) is one of the stocks on Jim Cramer’s game plan for the week. Cramer said that the company is the weakest among its other two peers. He commented:
“Plenty of apparel on Tuesday… Burlington Stores reports. It’s part of the big three… off-price, including TJX and Ross Stores. It probably hurts Burlington that the other two reported already, and they were terrific. As my mother always said, comparisons are odious, but Burlington is the weakest of the three.”
Stock market reports printed on a sheet of paper. Photo by RDNE Stock Project on Pexels
Burlington Stores, Inc. (NYSE:BURL) sells branded, value-focused fashion and home goods. It includes apparel, footwear, accessories, baby items, beauty products, and seasonal merchandise. Cramer discussed the company during the September 10 episode and remarked:
“Second on the list is Burlington Stores, which saw roughly 2.5% comparable sales growth in the first half because… I… have come to expect more than that, but they have flat growth in the first quarter, but 5% growth in the second, well ahead of the 1.5% number that Wall Street was looking for. Burlington also had a strong quarter. Despite softer trends in May, they were able to beat expectations as business got back to normal in June and July. We care about that cadence. Overall, it was a solid quarter… although management struck a more conservative tone with their full-year guidance, not as optimistic as TJX.
Because Burlington’s got more exposure to outerwear than others, their numbers are more sensitive to variations in the weather. We got a warm winter and their sales got hit hard. That’s why they were more concerned about the second half. Although Wall Street mostly chalked up that to management being cautious and the stock still rallied more than 5% in response to the quarter. I thought that was a gift…
Now that we know how all three off-price apparel companies are doing, what about paying for numbers?… Alright, in terms of cheapness, Ross Stores leads the way, trading just 22 times next year’s earnings estimates. That is very cheap, much cheaper than Burlington at 25 and then TJX at roughly 28 times next year’s numbers… Burlington has a PEG ratio of 1.4… Burlington repurchased just $26 million worth of stock last quarter. In the previous quarter, they did buy back over a hundred million dollars.
Management doesn’t guide to a full-year repurchase target, but if you just assume that the second half will match the first, that comes out to be about $250 million for the buybacks, that’s roughly 1.7% of the company’s market capitalization… As for Burlington, it’s really hard to put any of these companies in last place, as they all have a lot going for them in this environment. But Burlington’s latest guidance was fairly tepid, so if anyone comes in last, it’s got to be Burlington.”
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Disclosure: None. This article is originally published at Insider Monkey.
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