The Buckle Inc. Shares

2023 18 rugpjūčio2024 8 vasario Nauris Treigys

The Buckle Inc. is a mid-to-high range price class retailer of seasonal clothing, footwear, and accessories, targeting young men and women aspiring for fashion. Until January 28, 2023, it operated in 441 retail stores under the names Buckle and Buckle Youth across 42 states.

The company offers a range of daily clothing items from various brand names, including jeans, other everyday wear, sportswear, outerwear, accessories, and footwear. The company places special emphasis on its customers and provides services such as free alterations, complimentary gift wrapping, convenient layaway options, the Buckle private credit card, and a guest loyalty program.

The majority of stores are located in regional shopping and lifestyle centers. However, in recent years, the company has successfully relocated several of its stores from closed shopping centers to larger center locations and intends to continue seeking more such relocation opportunities in the future.

The company was founded in 1948 in Nebraska as Mills Clothing Inc. It started as a typical men’s clothing store with only one retail location. In 1967, a second store was acquired, operating under the brand Brass Buckle. At the beginning of the eighth decade of the past century, the store’s image changed, and it became a denim store with a wide selection of jeans and t-shirts.

The first such store was opened in 1976 in Columbus, Nebraska. In 1977, the company started selling clothes for girls and opened its first store in a shopping center. The company changed its corporate name to The Buckle Inc. on April 23, 1991, and since then, it has experienced significant growth.

The company owns 47 brands.

Income distribution by sector:

The Buckle Inc. — Income distribution by sector

Finances

The company generates stable income, but its growth is not as rapid as desired. Only when the company relocated several stores to new shopping centers, the growth of income improved. The average annual income growth over 10 years was 1.81%, while the growth for the last financial year reached 3.91%.

In its niche, the company occupies very strong competitive positions. The Gross margin remains above 40% and is stable. Hence, the Net Income is highly satisfying, reaching an impressive 18.93% in the past year. The decrease in profit over the year is linked to expansion into new markets.

The very good news is that the company has no debts to credit institutions, so there is no need to pay any interest. This leaves money to reward the shareholders. And the company is very generous in this regard. For the 2022 financial year, the company distributed almost 80% of the Net Income to the shareholders in the form of dividends.

Payment comes from somewhere. The average annual EPS growth over the past 10 years was only 4%, while the average annual EPS growth over the last 5 years was as high as 22.63%. The yield of total assets is over 30%, and the average annual Return on Equity (ROE) reaches 39%. A very good return. However, due to the payment of very large dividends, the Return on Retained profit has become negative. This means that we are dealing with a good money generator.

If the company owners would like to sell the business and invest the received funds into 10-year US Treasury bonds while receiving the same return as they did in 2022, then they should sell the shares at a price of 127 USD.

Income Estimated, USD

	2023	2024	2025	2026	2027
Revenue	1,369,569,343	1,394,393,632	1,419,667,876	1,445,400,231	1,471,599,001
Net Income	188,726,656	192,147,442	195,630,233	199,176,152	202,786,342
EPS	3.02	3.04	3.07	3.09	3.12

The Investment scoreboard is one of the better ones among those we have analyzed:

The Buckle Inc. Shares

The company’s stocks are listed on the New York Stock Exchange. The ticker is BKE.

As we already mentioned, the company pays substantial dividends, but their dynamics are unstable, despite the observed growth. The average annual dividend growth for the 9 years reaches 8%, and the dividend yield at the time of writing is as high as 10.23%. No deposit offers such a yield.

The stocks are not considered highly risky, the standard deviation is around 15%, and the beta is 1.06. We recommend having shares of this company in your portfolio solely due to its dividend yield. However, it is also possible to expect an increase in the stock price in the future.

The perspective of prices calculated by the GRAPES method is $104 USD. Our perspective of prices calculated by our method is more modest. However, in all cases, it is evident that the stock is not adequately valued in the market. The PEG ratio is only 0.53. The equity risk premium even reaches 4.27%.