BKE Needs to Buckle Up Heading into Earnings Report

Buckle stock may not be an extravagant investment but it is safe and reliable

Mar 10, 2022 at 10:21 AM
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Buckle Inc (NYSE:BKE) is gearing up for its fourth-quarter earnings report, due out before the open on Friday, March 11. Most recently, Buckle had reported earnings of $1.26 per share for its third quarter. However, Wall Street analysts are optimistic that the company will delivered an increased EPS (earnings per share) of $1.44 in the upcoming Q4 earnings report.

The stock has a mixed history of post-earnings moved during the past two years. BKE scored a positive session after three of its reports, while the stock was unchanged following earnings confessional last March, and fell lower after the remaining four sessions. On average, the equity has managed a 5.5% next-day swing, regardless of direction, which is much lower than the 10.4% move the options pits are pricing in this time around.

Speaking of options pits, Buckle's have been bullish, at least among short-term traders, where calls are incredibly popular. This is per the security's Schaeffer's put/call open interest ratio of 0.23, which sits higher than just 14% of readings from the past year. 

The stock was last seen up 0.8% at $35.94 as it finds its footing atop its year-over-year breakeven. However, BKE is facing up against several short-term trendlines, including  its 30-day moving average, which has kept a tight lid on the stock for the past couple weeks. Year-to-date, the equity is down 15.4%.

bke march 10

Moreover, the retailer offers a very attractive dividend yield of 4.05% with forward dividend of $1.40. BKE is also seemingly undervalued when looking at its current valuation metrics. Buckle stock trades at cheap price-earnings ratio of 7.63 and a price-sales ratio of 1.47. In addition, Buckle holds a decent balance sheet with $480 million in cash and $293 million in total debt.

From a fundamental point of view, the only issue seems to be that the fashion retail company is expected to see a 13.1% decrease in earnings and only a 0.8% increase in revenues for fiscal 2022. Nonetheless, Buckle has maintained consistent top- and bottom-line growth in previous years. BKE's trailing 12-month revenues and net income have increased by 39% and 147%, respectively, since fiscal 2019.

Overall, Buckle stock remains an intriguing option for long-term investors, despite a weak outlook for 2022, due to the retail company’s low valuation and its high dividend yield.


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