Buckle: Denim and Dollars
11/10/2015 8:00 am EST
Offering a unique mix of high quality, trendy apparel, accessories, and footwear, this recommendation caters to fashion-conscious young men and women, explains value investor Charles Mizrahi, editor of Hidden Values Alert.
Known as a denim destination, Buckle (BKE) carries a wide selection of fits, styles, and finishes from leading denim brands, including the company’s exclusive brand, BKE.
They currently have 15 private label brands across all merchandise categories. Private label brands have higher gross margins and currently account for 35% of sales.
Denim continues to be the foundation of all their offerings, accounting for more than 43% of sales in 2014. Buckle currently operates 465 retail stores in 44 states as of October 2015.
Online sales continue to represent a larger share of revenue. At the end of 2014, online sales represented more than 8% of total sales.
As the company's online platform continues to grow, we see the % of online revenue growing and representing a larger percentage of total sales.
As of June 2015, BKE has $142 million in cash and short-term investments and no long-term debt. Free cash flow over the trailing twelve months is $137 million.
In January 2015, BKE paid out a special dividend to shareholders for the seventh year in a row.
In addition, the company also increased their dividends. Over the past ten years, total cash returned to shareholders was $1.3 billion; $1.2 in special dividends and $148 million in share repurchases.
As value investors, we only recommend purchasing stocks in our model portfolio that have a P/E no greater than 12 and are still trading at or below their original purchase price.
Buckle currently trades at a p/e of 10 and meets these criteria. As such, we rate the stock a buy.
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