Is The Buckle, Inc. (NYSE:BKE) Potentially Undervalued?

The Buckle, Inc. (NYSE:BKE), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine Buckle’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out the opportunities and risks within the US Specialty Retail industry.

Is Buckle Still Cheap?

Great news for investors – Buckle is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $50.39, but it is currently trading at US$39.96 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Buckle’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Buckle generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Buckle, it is expected to deliver a relatively unexciting earnings growth of 3.5%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Buckle, at least in the near term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since BKE is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on BKE for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy BKE. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Be aware that Buckle is showing 2 warning signs in our investment analysis and 1 of those is potentially serious...

If you are no longer interested in Buckle, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.