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Why Burlington Stores’ Returns Have Exceeded Peers’

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Year-to-date returns

As of May 27, Burlington Stores (BURL) has delivered a total shareholder return of 42.2% year-to-date. The company’s larger off-price peers TJX Companies (TJX) and Ross Stores (ROST) have delivered total returns of 8.8% and 0.4%, respectively. High-end department store Nordstrom (JWN) has delivered a total return of -22.1%. Aside from its full-line stores, Nordstrom also operates off-price Rack Stores.

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Total return or total shareholder return takes into account stock price appreciation and dividends as well as any other distribution income realized during a given period. Currently, Burlington Stores doesn’t pay dividends. As of May 27, the current dividend yield for TJX Companies, Ross Stores, and Nordstrom was 1.2%, 0.9%, and 16.6%, respectively.

As of May 27, the stock price of Burlington Stores has risen 41.4% since the start of 2016. The stock prices of TJX Companies, Ross Stores, and Nordstrom have risen 8.2%, -0.8%, and -23.9%, respectively. Burlington Stores—along with these three peers—accounts for 0.4% of the iShares Dow Jones U.S. ETF (IYY).

Analyst recommendations

As of May 27, 12 out of 15 analysts covering Burlington Stores’ stock had a “buy” recommendation. Three analysts had a “hold” recommendation, and none of the analysts had a “sell” recommendation. Unlike major departments stores like Macy’s (M) and Kohl’s (KSS), Burlington Stores and its off-price peers have delivered strong sales growth in 1Q16. Off-price retailers are performing well, even in a volatile retail environment. As we discussed in parts 1 and 2 of this series, Burlington Stores raised its earnings and sales guidance for fiscal 2016 following strong performance in 1Q16. As of May 27, the 12-month price target for Burlington Stores’ stock is $66.57, reflecting growth potential of 9.1%.

We’ll discuss Burlington Stores’ valuation in the concluding part of this series.

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