Why Buckle’s latest earnings are drawing investor attention
Buckle (BKE) just released first quarter results that showed sales of US$288.74 million and net income of US$46.88 million, compared with US$272.12 million and US$35.19 million a year earlier.
See our latest analysis for Buckle.
The earnings release comes after a mixed share price run, with Buckle’s stock up 1.45% on the day and 2.98% over the past week, but down 10.70% over the past month. Longer term total shareholder returns of 26.50% over one year and more than doubling over three and five years hint that sentiment has improved over time despite recent share price softness.
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With earnings, long term returns and an indicated 34% intrinsic discount all on the table, the key question is whether Buckle’s stock still trades below its fundamentals or if the market is already pricing in future growth.
Price-to-earnings of 12.2x: Is it justified?
Buckle trades on a P/E of 12.2x, and at a last close of $50.48 that level screens as good value relative to both peers and the broader US Specialty Retail industry.
The P/E multiple compares the share price with earnings per share and is a quick way to see how much investors are paying for each dollar of profit. For a retailer with high quality earnings and a long operating history, this is a common yardstick because it puts the focus squarely on how profits line up against the current share price.
Here, the key point is that Buckle’s 12.2x P/E is below the US Specialty Retail industry average of 21.7x and below a peer average of 18.8x. It also sits slightly under an estimated fair P/E of 12.7x. This suggests the current level is close to a mark that the market could reasonably move toward if conditions stay aligned with today’s assumptions.
Buckle therefore looks priced at a discount when stacked up against similar companies and the sector, while still sitting around the level indicated by the fair ratio model. This keeps expectations anchored rather than stretched.
Explore the SWS fair ratio for Buckle
Result: Price-to-earnings of 12.2x (UNDERVALUED)
However, the recent 10.70% one month share price decline and a 3.0% gap to the analyst price target show that sentiment could shift quickly if expectations change.
Find out about the key risks to this Buckle narrative.
Another view from the SWS DCF model
While the 12.2x P/E points to Buckle being modestly cheap, the SWS DCF model paints a stronger picture, with an estimated future cash flow value of $77.05 per share versus the current $50.48. If both signals are correct, how long could such a gap realistically persist?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Buckle for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With both risks and rewards in play, does the current mood around Buckle match your own view of the stock’s potential and vulnerabilities? Move quickly, review the underlying data and check the 4 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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