BKE - The Buckle: Fairly Valued And A Buy Here Or At Lower Prices

2024-04-08 23:50:33 ET

Summary

• Buckle is a denim-focused apparel retailer.
• The company is a slow grower with tremendous profitability and capital return metrics for its category, with long-standing shareholder-aligned management.
• BKE suffered challenges from 2015 until the pandemic: e-commerce competition, mall stores' secular decline, transitioning to a lower price range, and the fashion cycle.
• The company is posting much higher revenues, partly aided by the pandemic stimulus and partly by the fashion cycle. The future outlook is volatile, with FY23 comps down significantly and a worsening trend in early 2024.
• Fortunately, the valuation has already discounted most negative developments, turning the stock into an opportunity. That is why I consider Buckle a Buy at these prices.

Buckle ( BKE ) is a denim-focused apparel retailer.

The company is a slow grower with tremendous profitability and capital return metrics for its category, with long-standing shareholder-aligned management.

Buckle suffered challenges from 2015 until the pandemic: e-commerce competition, mall stores' secular decline, transitioning to a lower price range, and the fashion cycle. It survived, although losing sales and generated industry-record returns even during this period....

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