Change since fiscal Q2 results
Burlington Stores’ (BURL) 12-month forward PE multiple has declined 8.3% since the announcement of its results for the second quarter of fiscal 2018 in August. The company exceeded analysts’ earnings expectations and was almost in line with analysts’ sales estimate. It also raised its outlook for fiscal 2018. However, investors were disappointed with the lower-than-expected fiscal second-quarter same-store sales.
Comparison with off-price peers
As of September 25, Burlington Stores was trading at a 12-month forward PE multiple of 24.8x. Its forward valuation multiple is higher than TJX Companies (TJX) and Ross Stores (ROST), which were trading at 12-month forward PE multiples of 21.5x and 22.5x, respectively, as of September 25. These off-price retailers have a higher valuation than the S&P 500’s valuation multiple of 17.4x.
Analysts’ growth forecasts
Currently, analysts expect Burlington Stores’ revenue to grow 9.4% in fiscal 2018 and 8.6% in fiscal 2019. They anticipate adjusted EPS to rise 42.6% in fiscal 2018 and 14.6% in fiscal 2019. Lower taxes, higher sales, and improved margins are expected to boost its bottom line in fiscal 2018.
Analysts expect the adjusted EPS of TJX Companies and Ross Stores to rise 24.5% and 23.4%, respectively, in their current fiscal years. Overall, off-price retailers are proving their strength in a competitive retail environment despite the growing market share of online retailers, mainly Amazon (AMZN).
We’ll look at analysts’ recommendations for Burlington Stores stock in the next part of this series.