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Bear Of The Day: Burlington Stores (BURL)

Burlington Stores (BURL) is a Zacks Rank #5 (Strong Sell) and is slated to report before the close on August 25. Many retails names struggled in the last few months, but estimates have dropped for this stock.  The current Earnings ESP is -25%. This article Let’s look at why this stock is a Zacks Rank #5 (Strong Sell) in this Bear of the Day article.

Description

Founded in 1972, and headquartered in New Jersey, Burlington Stores, Inc. functions as a retailer of branded apparel products and is also a Fortune 500 company. It operates in the United States and Puerto Rico. The company offers products such as ladies sportswear, menswear, youth apparel, baby furniture, accessories, home décor and gifts, and coats.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of BURL, I see two beats of the  Zacks Consensus Estimate and two misses.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For BURL see annual estimates moving lower.

The current fiscal year 2023 consensus number has dropped from $6.60        to $6.01 over the last 60 days.

The next year has dropped from $9.03 to $8.09 over the same time period.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).


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