Should You Investigate The Buckle, Inc. (NYSE:BKE) At US$41.32?

The Buckle, Inc. (NYSE:BKE), is not the largest company out there, but it saw a decent share price growth of 15% on the NYSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a US$2.1b market cap stock, it seems odd Buckle is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on Buckle’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Buckle

Is Buckle Still Cheap?

Great news for investors – Buckle is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Buckle’s ratio of 10.03x is below its peer average of 14.38x, which indicates the stock is trading at a lower price compared to the Specialty Retail industry. What’s more interesting is that, Buckle’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Buckle generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -7.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Buckle. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although BKE is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to BKE, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on BKE for a while, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 3 warning signs for Buckle you should be mindful of and 1 of these is a bit concerning.

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.