New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Value Ideas and Strategies
Share and discuss value investing ideas and investing strategies.
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
Buckle Up Your Portfolio With This Stock
Posted by: mitu77 (IP Logged)
Date: April 12, 2014 12:05PM

The market scenario for the casual wear retail industry has not been so appealing, and with retailers unable to record anticipated growth has led some investors shy away from this segment. Despite this, one casual retailer can be considered as a safe investment for investors, those who believe in slow and steady wins the race.

The Buckle (BKE) is a retailer of apparel, footwear, and accessories for men and women. The company operates over 450 retail stores in 43 states throughout the United States by the names of Buckle and The Buckle. The company sells brand name casual apparel having a prime focus on denims which accounts for over 45% of sales, other casual tops, bottoms, sportswear, outerwear, accessories, and footwear.

The company has a strong product portfolio with a wide range of brands that offer a rich choice to shoppers. To have a faster return ratio one can think of making fast money on investments as the stock is down by 19% in the past 6 months.

The most appealing thing about Buckle is that it’s a debt free company with over $200 million in cash and investments. The company has been safeguarding the interest of its investors by regularly paying dividend for the past 6 years, with an average dividend of 2% which spiked to 9% in 2012.

Another remarkable financial statistic about the company is that it has been consistent with its operating margin that is around 22% and has maintained it for the past 5 years. Moreover, from an investor’s point of view, is good to know that 33.5% of stake is held by the chairman of the company while 6% more by senior level staff. Investor’s money is always considered safe when the board members have high stakes in the company.

The journey ahead

The company has been slow but steady in terms of square footage growth. In terms of square footage, it recorded a constant growth of 3% and the estimated future growth is anticipated to be in range of 5%-6%.

The better is yet to come for Buckle as it can grow by opening 15-20 new stores every year, this enables it to be at a faster pace than its closest competitors in terms of new stores. Currently, the number of stores in operation for Buckle hangs around 50% of its competitors likes American Eagle and Gap.

Edge over its competitors

On the operating margin front, the company leads competitors like American Eagle and Abercrombie, with both having operating margins below 10%. Another stringent competitor, Gap, which is also in the race but fails to be at par with Buckle in terms of operating margins as it posted its operating margins marginally over 14%.

Investors can eye Buckle

The Buckle has a steady 5-year earnings yield valuation of over 12%. Buckle has a high short ratio, which today stands at almost 27% of the float. At 5% in dividend yield, P/E ratio of 13.3 and a profit margin of 14.4%, it is definitely a good buy at current levels.

Stocks Discussed: BKE,
Rate this post:

Rating: 3.7/5 (3 votes)

Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial