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.
Industry Group Ranking
Cup with Handle
* Not real-time data. All data shown was captured at
1:26PM EDT on
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.
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.
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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