BKE

Buckle, Inc.

Consumer


Presented:01/22/2020
Price:$25.32
Cap:$1.25B
Current Price:$43.41
Cap:$2.20B

Presented

Date01/22/2020
Price$25.32
Market Cap$1.25B
Ent Value$1.15B
P/E Ratio12.52x
Book Value$8.48
Div Yield4.74%
Shares O/S49.23M
Ave Daily Vol545,020
Short Int49.06%

Current

Price$43.41
Market Cap$2.20B
The Buckle, Inc. engages in the manufacturing and trading of apparel, footwear, and accessories. It manages and operates retail stores. The company markets a wide selection of brand names and private label casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories and footwear. It provides its products under the brands BKE, BUCKLE BLACK, OUTPOST MAKERS AND VEECE. The Buckle was founded by David Hirschfeld in 1948 and is headquartered in Kearney, NE.

Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), American Eagle Outfitters Inc (AEO), The Buckle Inc (BKE), The Gap Inc (GPS) 

Highlights

The presenter is short shares of Buckle Inc (BKE), a 450-store, US-based specialty retailer of casual apparel, including denim, footwear, and accessories. Despite LSD comparable stores sales growth in 2019, he believes BKE appears to be overvalued in an increasingly challenged specialty retail market which has faced overall declines in sales, margins and earnings. BKE currently trades at 12x forward P/E and 7x current EBITDA which he views as “rich” relative to comps and as a result models a 50% downside to reach a PT of ~$12. 

After a few years of declining revenue, BKE’s sales stabilized in 2019 with ~ $1B sales. With 3 positive quarters and “decent” holiday numbers, the presenter reasons that the stock performed better than other specialty retailers as a whole, owing to a “regional store bias”. The majority of its stores benefitted from better economic conditions compared to previous years in the central US region. 

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