Earnings Cheat Sheet: The Buckle Straps In, Beats Estimates

The Buckle Inc. (NYSE: BKE) is a retailer of casual apparel, footwear, and accessories for fashion conscious young men and women.  The company has beaten consensus EPS estimates in nine of the past eleven quarters and announced a special dividend of $2.50/share contemporaneously with last Thursday’s quarterly report.

Earnings: 3Q profit of $34.4 million ($0.73/share) vs. 3Q09 profit of $33.3 million ($0.71/share).

Revenue: Up 5.2% YoY to $243.3 million

Actual vs. Wall St. Expectations: BKE beat the Street in terms of both revenue and EPS, as analysts had been expecting 3Q EPS of $0.69 on revenue of $238 million.

Notable Stats: Same store sales rose 0.5% YoY.  Online sales rose 21% to $15.1 million.

YTD revenue of $646.8 million stands 3.7% ahead of last year’s pace.

Gross margins declined to 43.5% from 44.6%.

Did You Hear That? Analysts at S&P upgrades shares of BKE to Sell from Strong Sell, noting that they are “negative on trends for teen retailers on a weak macro environment, higher input costs and heightened competition.”

Additionally, KeyBanc raised its investment rating on shares of The Buckle, citing “more sustainable margins than competitors.”

Technicals: BKE has spent the better part of the last two years in a relatively tight rectangular pattern, trading up towards $40 and then down towards $25.  Shares are nearing the high end of that range, having hit a high of $38.73 last week, and a test of resistance is likely to occur in the near future.  A breakout above $39, and especially to new highs (above $40.35) would be bullish for the intermediate term.  Conversely, an unsuccessful test would indicate a move back down towards the lower limits of the range.

Commentary: BKE has gained momentum as of late, with investors beginning to believe that the holiday season will be strong and that consumer sentiment will continue to improve.  Shares benefit from the relatively stronger employment situation in farm states and will surely continue to benefit if consumers can muster the will to return to some of their old habits.  BKE’s 50-day moving average looks ready to cross over its 200-day and volume has been robust throughout the stock’s recent up-trend.  With 401 locations across 41 states, BKE is an interesting play for investors looking to gain exposure to the wallet of the American consumer.

Disclosure: No holdings in BKE.