Boot Barn Holdings (BOOT) appears to have all the characteristics of a growth stock valued at an attractive price, and is worth revisiting, suggests Doug Gerlach, growth stock specialist and editor of SmallCap Informer.
Founded in 1978, Boot Barn is the largest and fastest-growing lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S.
The company offers a wide selection of work and lifestyle brand through 240 stores in 33 states. Stores are located in the west, south, and Midwest U.S., with a heavy concentration in Texas. Boot Barn also operates several e-commerce channels which bring in 17% of sales.
Country music, western events, ranching, horse ownership, and agriculture are all driving western wear growth, while blue collar employment trends drive work wear growth.
Management sees work wear and western wear as making up a $20 billion market opportunity, and believes it can double it store count from current levels. The company has active plans to build stores in three additional states.
Boot Barn’s current store count is more than 3.0 times as many stores as their closest competitor. The company is opportunistic and purchases independently-owned stores when possible, then rebranding them as Boot Barn operations.
We project growth at 14% and EPS growth at 14.5% annually through fiscal 2022. Wall Street analysts are looking for 20% annual EPS growth over the next five years, so our projections remain conservative.
The recent turndown in the stock price has put Boot Barn in buy territory once again. With a selected high P/E of 21.3 and five-year projected EPS of $3.42, BOOT could reach $73.
On the downside, a retreat to a low P/E of 11.9 multiplied by TTM EPS of $1.74 would deliver a low price of $21. The upside to downside ratio is 4.3:1, above our 3:1 minimum, and the projected annual total return is 19.0%.
