Banking

Burlington, IBD Stock Of The Day, Tests Buy Point As Retailer Makes Big Gamble

Burlington Stores

Burlington Stores

BURL


$5.88


1.78%


Burlington, IBD Stock Of The Day, Tests Buy Point As Retailer Makes Big Gamble8%

IBD Stock Analysis

  • Burlington stock briefly topped a 336.53 buy point.
  • The relative strength line is near recent highs.
  • Much of the pattern formed below the 50-day line but the handle formed above it.
Burlington, IBD Stock Of The Day, Tests Buy Point As Retailer Makes Big Gamble

Industry Group Ranking

Burlington, IBD Stock Of The Day, Tests Buy Point As Retailer Makes Big Gamble

Emerging Pattern

Burlington, IBD Stock Of The Day, Tests Buy Point As Retailer Makes Big Gamble

Cup with Handle

* Not real-time data. All data shown was captured at
1:26PM EDT on
07/30/2021.

Burlington Stores (BURL) is the IBD Stock Of The Day as the off-price retailer bets the treasure-hunt urge will top e-commerce trends. BURL stock flirted with a buy point.




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BURL Stock Technical Analysis

Shares rose 1.7% on the stock market today. BURL stock briefly topped a 336.53 buy point off a cup-with-handle base, then retreated, according to MarketSmith chart analysis. Much of the pattern formed below the 50-day line but the handle formed above it, which is a positive.

The relative strength line is below the consolidation peak, though not far from highs. A rising RS line, the blue line in the chart shown, means that a stock is outperforming the S&P 500 index.

BURL stock holds a solid Relative Strength Rating of 84 out of 99, according to the IBD Stock Checkup tool. That means it outperformed 84% of all stocks in the past year.

Its Composite Rating, which combines key fundamental and technical metrics in a single easy-to-use score, is 77 out of 99.

Burlington Stores belongs to the apparel and shoes retail industry group, which ranks a solid No. 8 out of 197 groups tracked by IBD. The group, which has been showing strong share-price momentum as a whole, includes off-price peers TJX (TJX) and Ross Stores (ROST), as well as the likes of Lululemon (LULU) and Boot Barn (BOOT).

Off-price and discount retailers tend to be resilient in tough markets. That could make Burlington stock a nice counterweight to tech-heavy names in a growth stock portfolio.

Burlington shows a poor Accumulation/Distribution Rating of D, on an A+ to E scale. However, BURL stock shows three quarters of increasing fund ownership, with 1,248 funds owning it as of June, up 2% from March.


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Burlington’s Big Gamble

The New Jersey-based retailer earns a poor EPS Rating of 45 out of 99. Burlington turned to a loss last fiscal year amid the pandemic, with sales sliding 21%.

For all of fiscal 2021, Wall Street expects Burlington Stores to swing to EPS of $8.81 after losing $2.57 a share last year. Sales are seen increasing 55% to $8.916 billion for the full year.

On May 27, the retailer delivered a huge earnings beat for the first quarter, though BURL stock fell that day. Sales jumped 174% year over year, accelerating sharply from a 3% gain the prior quarter. Armed with stimulus checks, shoppers flocked to “treasure hunt” for clothes, shoes and accessories again as states across the nation started to reopen.

Even against pre-pandemic 2019 results, Q1 earnings increased 106% while sales rose 35%. In addition, comparable store sales increased 20% and margins expanded 230 basis points.

Management touted operating with leaner inventories and adopting a smaller-store format. Meanwhile, the company is betting on brick-and-mortar stores over e-commerce.

In March, Burlington Stores said it’s targeting 2,000 stores in the long term, up from a prior target for 1,000 stores. It tied the hike to its pursuit of a smaller-store format, as well as opportunities from retail disruption and industry store closures. In 2021, Burlington expects to open 75 net new stores.

It also said it’s exiting e-commerce entirely.

“In our business, which is a moderate off-price business, the nature of the treasure hunt and the average price point that we operate at mean that bricks-and-mortar stores have a significant competitive and economic advantage over e-commerce,” CEO Michael O’Sullivan said on a March 5, 2020, earnings call, according to a FactSet transcript.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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