Burlington Stores, Inc. Announces Third Quarter Fiscal Year 2024 Earnings Release Date, Conference Call And Webcast

Have you been paying attention to shares of Costco (COST)? Shares have been on the move with the stock up 6.2% over the past month. The stock hit a new 52-week high of $962 in the previous session. Costco has gained 43% since the start of the year compared to the 26.6% move for the Zacks Retail-Wholesale sector and the 23% return for the Zacks Retail - Discount Stores industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 26, 2024, Costco reported EPS of $5.15 versus consensus estimate of $5.05 while it missed the consensus revenue estimate by 0.07%.

For the current fiscal year, Costco is expected to post earnings of $17.75 per share on $273.33 billion in revenues. This represents a 10.18% change in EPS on a 7.42% change in revenues. For the next fiscal year, the company is expected to earn $19.36 per share on $291.13 billion in revenues. This represents a year-over-year change of 9.03% and 6.51%, respectively.

Valuation Metrics

Costco may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Costco has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 53.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.1X. On a trailing cash flow basis, the stock currently trades at 44.5X versus its peer group's average of 16.8X. Additionally, the stock has a PEG ratio of 5.82. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Costco currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Costco passes the test. Thus, it seems as though Costco shares could have a bit more room to run in the near term.

How Does COST Stack Up to the Competition?

Shares of COST have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Burlington Stores, Inc. (BURL). BURL has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of F.

Earnings were strong last quarter. Burlington Stores, Inc. beat our consensus estimate by 26.32%, and for the current fiscal year, BURL is expected to post earnings of $7.91 per share on revenue of $10.71 billion.

Shares of Burlington Stores, Inc. have gained 4.3% over the past month, and currently trade at a forward P/E of 33.28X and a P/CF of 23.92X.

The Retail - Discount Stores industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for COST and BURL, even beyond their own solid fundamental situation.

Zacks Investment Research

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores?

The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

For value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth Score

Growth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum Score

Momentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.

VGM Score

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Burlington Stores (BURL)

Founded in 1972, and headquartered in New Jersey, Burlington Stores, Inc. functions as a retailer of branded apparel products, and is a Fortune 500 company. It operates in the United States and Puerto Rico. The company offers products such as ladies sportswear, menswear, youth apparel, baby furniture, accessories, home décor and gifts, and coats.

BURL is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 33.16; value investors should take notice.

One analysts revised their earnings estimate higher in the last 60 days for fiscal 2025, while the Zacks Consensus Estimate has increased $0.05 to $7.91 per share. BURL also boasts an average earnings surprise of 18.4%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, BURL should be on investors' short list.

Zacks Investment Research

Investors interested in stocks from the Retail - Discount Stores sector have probably already heard of Burlington Stores (BURL) and Costco (COST). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, both Burlington Stores and Costco are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

BURL currently has a forward P/E ratio of 31.32, while COST has a forward P/E of 49.24. We also note that BURL has a PEG ratio of 1.26. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. COST currently has a PEG ratio of 5.38.

Another notable valuation metric for BURL is its P/B ratio of 14.74. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, COST has a P/B of 16.41.

Based on these metrics and many more, BURL holds a Value grade of B, while COST has a Value grade of C.

Both BURL and COST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BURL is the superior value option right now.

Zacks Investment Research

Burlington Stores, Inc. BURL has leveraged its expansion and value-driven model to deliver outstanding results. By prioritizing customer value, enhancing supply-chain performance and expanding reach, BURL has solidified its position as a leading off-price retailer and set a strong foundation for sustained growth.

The company’s solid sales growth in the second quarter of 2024, fueled by an aggressive store expansion strategy, strong comparable sales and operational efficiencies, sets a foundation for ongoing success. Improved inventory management has enhanced profitability. The company’s updated fiscal 2024 guidance reflects confidence in its sustained strong performance, with anticipated gains in margins and earnings.

BURL’s Expanding Store Footprint

Burlington showcased a robust performance in the second quarter of fiscal 2024, reflecting successes that drove its sales and profitability beyond expectations. Total sales saw 13% year-over-year growth, fueled by the expansion of stores and positive comparable store sales, which rose 5%.

The company added 36 stores in second quarter, ending the quarter with 1,057 locations, part of its ambitious plan to reach 100 new stores by the end of the fiscal year. Burlington’s expansion demonstrates its commitment to capturing a larger share of the growing value-oriented retail market, positioning it as a go-to destination for budget-conscious shoppers.

Burlington’s Strategic Pricing & Inventory Management

BURL’s profitability has been equally impressive. Operating margins improved by 160 basis points year over year, driven by strong inventory management and higher full-price sales, which reduced the need for markdowns. The company’s gross margin expanded by 110 basis points due to improved inventory turnover and effective merchandising strategies.

Notably, Burlington has focused on delivering strong value at initial price points, attracting customers with high-quality offerings that align with their expectations, ultimately reducing the need for clearance. This strategy not only enhances profitability but also reinforces the company’s reputation as a value-driven retailer with a competitive edge.

BURL’s Growth Prospectus for FY24

Burlington, which shares space with Skechers SKX, Steven Madden, Ltd. SHOO and Abercrombie ANF, updated its fiscal 2024 guidance, signaling stronger results. Total sales are expected to rise 9-10%, up from the previously mentioned 8-10%. Comparable store sales are projected to grow 2-3%, an improvement from the earlier stated 0-2%.

The adjusted operating margin is forecast to increase 50-70 basis points, higher than the prior stated 40-60 basis points. Adjusted earnings per share are expected to be $7.66-$7.96, up from the previously stated $7.35-$7.75.

For the third quarter, Burlington anticipates a total sales increase of 10-12%, with comparable sales growth of 0-2% and an adjusted EBIT margin improvement of 60-80 basis points. In the fourth quarter, comparable sales are forecast to be flat or rise to 2%, with total sales growth expected to be 5-7%.

Synopsis of SKX, SHOO & ANF

Skechers is focused on expanding its direct-to-consumer segment and growing international sales. The company plans to invest in store openings and enhance omnichannel capabilities. These initiatives align with its long-term strategy to improve operational efficiency and expand customer reach.

For fiscal 2024, Skechers expects sales between $8.93 billion and $8.98 billion, suggesting an increase from the $8 billion reported in fiscal 2023. It anticipates earnings per share between $4.20 and $4.25, indicating a rise from the $3.49 recorded in fiscal 2023.

Steven Madden’s recovery in the U.S. wholesale footwear business signals a positive shift toward normalized inventory levels and renewed growth with key retail partners. This recovery underscores the brand’s strength in its primary market and highlights its ability to overcome past challenges. With this improvement, the company is well-positioned for sustainable growth in its core business. Steven Madden’s solid business framework enables it to capitalize on market opportunities and enhance stakeholder value.

For 2024, SHOO expects revenue growth of 11-13% from that reported in 2023, with adjusted earnings projected at $2.55-$2.65 per share, implying growth from the $2.30 recorded in 2023.

Abercrombie is on track to achieve its 2024 target of demonstrating sustainable, profitable growth. The company expects to continue benefiting from strength in its brands, driven by its focus on delivering high-quality, on-trend assortments for new and retained customers across regions and brands. It has also been focused on making investments across stores, digital and technology, which are slated to aid the company in the long term.

Backed by the strong first-half fiscal 2024 results, Abercrombie raised its sales and operating margin views for fiscal 2024. It anticipates net sales for fiscal 2024 to increase 12-13% from the $4.3 billion reported in the prior year. It earlier expected net sales growth of 10% for fiscal 2024.

Zacks Investment Research

PC Connection (CNXN) came out with quarterly earnings of $0.97 per share, missing the Zacks Consensus Estimate of $1.01 per share. This compares to earnings of $0.97 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -3.96%. A quarter ago, it was expected that this information technology services provider would post earnings of $0.83 per share when it actually produced earnings of $1, delivering a surprise of 20.48%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

PC Connection, which belongs to the Zacks Retail - Computer Hardware industry, posted revenues of $724.72 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.31%. This compares to year-ago revenues of $693.09 million. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

PC Connection shares have added about 3% since the beginning of the year versus the S&P 500's gain of 22.3%.

What's Next for PC Connection?

While PC Connection has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for PC Connection: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.02 on $746.58 million in revenues for the coming quarter and $3.52 on $2.84 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Computer Hardware is currently in the bottom 6% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the broader Zacks Retail-Wholesale sector, Burlington Stores (BURL), has yet to report results for the quarter ended October 2024.

This discount retailer is expected to post quarterly earnings of $1.53 per share in its upcoming report, which represents a year-over-year change of +56.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Burlington Stores' revenues are expected to be $2.56 billion, up 11.6% from the year-ago quarter.

Zacks Investment Research