Unveiling Burlington Stores (BURL)'s Value: Is It Really Priced Right? A Comprehensive Guide
In This Article:
As of September 18, 2023, Burlington Stores Inc (NYSE:BURL) recorded a daily loss of 5.6% and a 3-month loss of 7.99%. With an Earnings Per Share (EPS) (EPS) of 4.06, the question arises: is the stock significantly undervalued? This article presents a comprehensive valuation analysis of Burlington Stores (NYSE:BURL). We invite you to delve into the following sections to understand the company's intrinsic value better.
Company Introduction
Burlington Stores Inc (NYSE:BURL) is the third-largest American dedicated off-price apparel and home fashion retail firm, boasting 927 stores as of the end of fiscal 2022. The company offers a vast assortment of products from over 5,000 brands, undercutting conventional retailers' regular prices by up to 60%. Burlington Stores focuses on providing a treasure-hunt experience with a quickly changing array of merchandise in a relatively low-frills shopping environment. The company's stock price and the GF Value, an estimation of fair value, will be compared in the following sections to provide a more profound exploration of the company's value.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value that the stock should ideally be traded at.
The stock of Burlington Stores (NYSE:BURL) appears to be significantly undervalued based on GuruFocus' valuation method. The GF Value estimates the stock's fair value based on three key factors: historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. If the share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. On the other hand, if the share price is significantly below the GF Value calculation, the stock may be undervalued and have higher future returns. At its current price of $ 139.51 per share, Burlington Stores stock appears to be significantly undervalued.
Because Burlington Stores is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
Link: These companies may deliver higher future returns at reduced risk.
Financial Strength
Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Thus, it is important to carefully review the financial strength of a company before deciding whether to buy its stock. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a company. Burlington Stores has a cash-to-debt ratio of 0.11, which is worse than 79.64% of 1100 companies in the Retail - Cyclical industry. GuruFocus ranks the overall financial strength of Burlington Stores at 5 out of 10, which indicates that the financial strength of Burlington Stores is fair.