Burlington (BURL) Q4 Earnings: Will It Beat Estimates Again?

Burlington Stores, Inc. (NYSE:BURL) is expected to report fourth-quarter fiscal 2017 results on Mar 1. The question lingering in investors’ minds is, whether this retailer of branded apparel products will be able to maintain its positive earnings surprise streak in the to-be reported quarter as well.

Notably, the company’s earnings have outpaced the Zacks Consensus Estimate for 16 straight quarters now, with a trailing four-quarter average of 15.2%. The current Zacks Consensus Estimate for the quarter under review stands at $2.08, reflecting year-over-year growth of 16.9%. The consensus estimate is ahead of the company’s guided range of $2.02-$2.06 per share.

Let’s delve deeper to find out the factors likely to have a bearing on the company’s fourth-quarter results.

Factors at Play

Sound Fundamentals Support Margin Expansion

Burlington Stores has made multiple changes in its business model to resonate well with the ongoing changes in the industry. Impressively, the company’s current Open-to-Buy off-price model is helping customers to get nationally branded, fashionable, high quality and fair priced products. Furthermore, it has increased vendor counts, made technological advancements, initiated better marketing approach and focused on localized assortments.

These factors along with effective inventory management and cost containment efforts have helped elevate gross margin, which has shown constant improvement in the last few years. Additionally, gross margin expanded 80, 110 and 100 basis points to 40.9%, 40.7% and 42.2%, respectively, in the first, second and third quarters of fiscal 2017.

Top Line Buoyed by Sturdy Comps Performance

Apart from having a robust earnings history, Burlington Stores has been doing well on the revenue front. Evidently, the company’s top line has outpaced consensus mark in five of the trailing seven quarters and also shown constant improvement over the past few quarters. Management had earlier projected total sales increase of 11-12% including 5% from the 53rd week for the fiscal fourth quarter. For the impending quarter, analysts polled by Zacks expect revenues of $1,882 million, up nearly 11.6% year over year.

Additionally, amid a competitive retail backdrop, Burlington Stores’ comparable-store sales (comps) have witnessed constant improvement over the past few years. In fact, the positive momentum continued in fiscal 2017 as well, with the first, second and third quarters witnessing a growth of 0.5%, 3.5% and 3.1%, respectively. For the final quarter, comps are envisioned to grow in the 2-3% range. Meanwhile, analysts surveyed by Zacks expect comps to increase by 2.8%.

What the Zacks Model Say?

Our proven model shows that Burlington Stores is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Burlington Stores has an Earnings ESP of +0.06% and a Zacks Rank #2. This makes us reasonably confident of an earnings beat.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Dollar General Corporation (NYSE:DG) has an Earnings ESP of +2.05% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Best Buy Co., Inc. (NYSE:BBY) has an Earnings ESP of +5.16% and a Zacks Rank of 2.

Macy's, Inc. (NYSE:M) has an Earnings ESP of +0.92% and a Zacks Rank #2.

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