Yahoo Finance Burlington Stores: How a Subdued Outlook Affected Its Valuation
Burlington Stores Beats 4Q15 Estimates: Why the Subdued Outlook?
Current valuation
As of March 4, Burlington Stores (BURL) was trading at a 12-month forward PE (price-to-earnings) ratio of 19.6x. Burlington Stores’ valuation declined by 2.7% on March 3, the day the company announced its 4Q15 results and issued a subdued outlook for fiscal 2016 ending January 28, 2017.
Relative valuation
As of March 4, Burlington Stores was trading at a lower valuation multiple than off-price retailers The TJX Companies (TJX) and Ross Stores (ROST). As of March 4, The TJX Companies and Ross Stores were trading at forward PEs of 21.7x and 21.1x, respectively. Nordstrom (JWN), which operates off-price Nordstrom Rack stores, was trading at a forward PE of 16.7x.
Analysts expect Burlington Stores’ adjusted EPS (earnings per share) to grow by 17.8% in fiscal 2016. As mentioned in part one of this series, the company’s adjusted EPS increased by 26.2% in fiscal 2015.
Analysts expect the adjusted EPS of The TJX Companies and Ross Stores to increase by 4.5% and 8.4%, respectively, in the current fiscal year. Nordstrom’s fiscal 2016 adjusted EPS are expected to decline by 2.1%, as growth investments are expected to offset higher sales.
In the fiscal year ended January 30, 2016, The TJX Companies and Ross Stores posted higher sales growth of 6.4% and 8.1%, respectively, compared with Burlington Stores’ 5.8%. As discussed in part three of this series, Burlington Stores is implementing several initiatives to boost its sales. The iShares Morningstar Small-Cap ETF (JKJ) has a 0.8% exposure to Burlington Stores.
Fiscal 2016 outlook
Burlington Stores expects its fiscal 2016 net sales to grow by 6.5% to 7.5% and its same-store sales to rise by 2.5% to 3.5%. The same-store sales growth estimate is inclusive of a 0.5% increase related to the transfer of the company’s fragrance business from a leased to an owned category. The company expects adjusted EPS in the $2.62 to $2.72 range, compared with the EPS of $2.31 in fiscal 2015. For more updates, visit our Consumer Discretionary page.
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