BURLINGTON STORES, INC. (BURL): what the price requires

At today's price, BURLINGTON STORES, INC. (BURL) is priced for today's economics sustained for ~9.6 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/BURL

Headline

FieldValue
TickerBURL
CompanyBURLINGTON STORES, INC.
Current price$327.26/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed4.4%
Operating margin today5.0%
Margin compression implied-0.6pp
Must persist for9.6y
Multiple paid48x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.1 years.

How unusual the bet is: high

ReferenceValue
vs own history+2.00σ
cohort percentile (of 69 peers)97
sustained it ~9.6 years at this level15%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.56x4expensive
Earnings2.08x2expensive
Relative1.44x4expensive
Growth1.12x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.3%); the inversion above states its own rate.

Per-Model Detail (n=13)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$152.502.15xyesFCF base $0.4B, growth 11% (input: historical growth), terminal g 4.0%, WACC 7.3%, 6yr projection
DCF Exit MultipleGrowth$354.320.92xyesExit EV/EBITDA: 58.6x / 60.6x / 62.6x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$191.291.71xyesP/E 25.49x (blended: static sector reference 22x + trailing (TTM) 34x), scenarios: 21.1x / 25.5x / 29.9x (bear / base = reference held flat / bull), EV/EBITDA 27.98x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$105.183.11xyesBV/sh $28.63, ROE (TTM) 34.0%, ke 9.3%
Two-Stage Excess ReturnAsset$213.671.53xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$291.711.12xyesRev $11.9B, growth 11% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.8x / 2.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$188.071.74xyesEPS $9.72, growth 19% (input: historical EPS growth), PEG=1.74 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$163.262.00xyesBV $28.63 + 5yr PV of (ROE (TTM) 34.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$79.134.14xyes√(22.5 × EPS $9.72 × BVPS $28.63) — Graham's conservative floor
EV/EBITDA RelativeRelative$14.4322.68xyesEBITDA $0.43B × sector EV/EBITDA 14.0x (excluded from median)
FCF YieldEarnings$0.0132726.00xyesFCF $382.9M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.0132726.00xyesSBC-adj FCF $0.26B (FCF $0.38B − SBC $0.12B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings$313.631.04xyesEPS $9.72 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$371.640.88xyesRevenue $11.92B × sector P/S 2.0x
PEG Fair ValueRelative$282.111.16xyesEPS $9.72 × (PEG 1.5 × growth 19.3% (input: historical EPS growth)) → PE 29.0x
Earnings YieldEarnings$105.083.11xyesEPS $9.72 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.3b
Net debt / NOPAT (after-tax)2.99x
Net debt / operating income (pre-tax)2.41x
Interest coverage7.8x
Share count CAGR (buyback)-1.0%
Burning cashno

Bullet Takeaways

At about $337, Burlington trades near 49 times company-wide operating income. Inverted, the price asks the chain to hold growth near its self-funding ceiling for roughly a decade, a bet that the model flags as high, with the stock's own multiple stretched well above its history. Only the growth-DCF method reaches the price; the asset, earnings-power, and peer-multiple methods all land below it.

The recent results are strong. First-quarter fiscal 2026 net sales rose 14%, comparable store sales rose 6%, adjusted EPS climbed 26%, and gross margin expanded to 44.1%, prompting management to raise full-year guidance. The off-price model is executing well.

Capital is going into stores and buybacks. Burlington is opening roughly 115 net new stores in 2026, funds that growth internally, carries modest leverage at about 2.4 times operating income with interest coverage above 15 times, and is shrinking its share count. The thin operating margin near 4.5% is both the lever and the vulnerability.

Bull Case

Look at how Burlington deploys its cash, because the capital plan is the clearest expression of where management sees value. The company reinvests almost all of its free cash flow into opening new stores, guiding to roughly 135 gross and 115 net new locations in 2026, ahead of prior plans, while funding that build internally and keeping leverage modest at about 2.4 times operating income with interest coverage above 15 times. On top of the store growth, it shrinks the share count through buybacks, down about 1% a year. A retailer that can open new stores at attractive returns and still buy back stock is signaling that the unit economics work: each new Burlington store is a high-return reinvestment opportunity, and the company would rather build more of them than sit on cash.

The off-price model is the durable advantage behind those returns. Burlington buys branded merchandise opportunistically and sells it at a discount, which gives shoppers a treasure-hunt value proposition that holds up in good times and better in bad. The 10-K describes a core customer who is "25-49 years old, is more ethnically diverse than the general population," a large and value-oriented demographic (FY2025 10-K, accession 0000950170-25-040472). When household budgets tighten, off-price retailers like Burlington, TJX, and Ross gain share as consumers trade down from full-price retail, and when budgets are flush, the value still appeals. That counter-cyclical demand is why the model has compounded for years and why the growth-DCF method is the one that reaches the price.

The execution is delivering right now. First-quarter fiscal 2026 net sales rose 14%, comparable store sales rose 6% ahead of plan, adjusted EPS jumped 26%, and gross margin expanded 30 basis points to 44.1% on better merchandise margins and lower freight. The Burlington 2.0 elevation strategy, upgrading the in-store experience and merchandising mix, is lifting both traffic and ticket, and management raised full-year guidance to 9% to 11% sales growth and $11.45 to $11.80 in adjusted EPS. With a 34% return on equity, a long runway of new-store openings, and analysts at JPMorgan and UBS raising targets to $374 and $435, the bull case is that Burlington is a proven off-price compounder whose store-growth runway and margin-expansion program justify the premium the static frames cannot price.

Bear Case

The cycle question is whether these are peak results being priced as a permanent run rate. Burlington just posted a 6% comparable store sales gain, well above the 2% to 4% it guides for the full year, and a 26% jump in adjusted EPS. Those are excellent numbers, but off-price retail is cyclical, and the strongest comps tend to come when the consumer is healthy and inventory availability is favorable. A 6% comp is hard to repeat, and the company's own full-year guidance acknowledges a slowdown to the low-to-mid single digits. At about 49 times operating income, the price assumes near-ceiling growth sustained for roughly a decade, and history says only about 14% of comparable fast-growers held that pace that long. Extrapolating a strong quarter into a ten-year compounding assumption is the classic late-cycle valuation error.

The thin margin is the structural amplifier of any consumer wobble. Burlington runs an operating margin near 4.5%, so small changes in comps, freight, or markdowns swing the profit sharply. The 10-K ties demand directly to the macro backdrop, naming "prevailing global economic conditions, the costs of basic necessities and other goods, levels of employment, salaries and wage rates" as the drivers of spending, and flags exposure to "the closing of such destination retailers or anchor stores, or by a reduction in traffic" since many Burlington stores sit in centers anchored by other retailers (FY2025 10-K, accession 0000950170-25-040472). A recession that pressures the value-oriented core customer, a wave of co-tenant closures, or a markdown cycle from misjudged inventory would each hit the thin margin hard.

Then there is tariffs, cost inflation, and the valuation gap. Burlington sources a large share of imported branded merchandise, so higher tariffs raise its cost of goods at the same time wage and fuel inflation raise its operating costs, and an off-price retailer cannot always pass those through without dulling the value proposition that draws its customers. The store-growth strategy also carries its own risk: the 10-K cautions that opening stores in existing markets "may experience reduced net sales volumes in existing stores in those markets," a cannibalization drag as the footprint densifies. Meanwhile every valuation method except the growth-DCF lands below the price, the relative read near $194, the asset and earnings-power reads lower still, with a blended read near $191, roughly half the quote. The bet is that Burlington sustains exceptional execution for a decade through whatever the consumer cycle, tariffs, and competition throw at it. At 49 times operating income on a 4.5% margin, there is almost no cushion if any of that goes the wrong way.

Valuation

Burlington is priced as a long-duration growth compounder, and the multiple is steep. At about $337 (June 27, 2026) the price equals roughly 49 times company-wide operating income, which inverts into an assumption that operating growth holds near the self-funding ceiling for about ten years. The high multiple is partly a function of the thin operating margin near 4.5%: a healthy dollar profit on $12 billion of revenue still translates into a large multiple of operating income. The model flags the implied bet as high, and the stock's own valuation sits well above its historical range, with history suggesting only about 14% of comparable fast-growers sustained this pace for a decade.

The method families split decisively. Only the growth-DCF family reaches the price, with a discounted-future-market-cap read near $300 and an exit-multiple DCF near $363, both crediting years of double-digit compounding. Every other family lands below: the relative-valuation read near $194 on a blended sector and trailing multiple, the asset and excess-return reads in the $105 to $214 range against a book value of about $28.63 per share and a 34% return on equity, and the normalized earnings-power value effectively zero because cycle-average operating income is thin. The blended read across applicable methods is near $191, roughly 57% of the current price. The signal is clear: the price rests on durable high growth and is contradicted by every static frame.

The honest conclusion: this is a durability premium on a high-quality but cyclical, thin-margin retailer, not a value entry. The case works if Burlington keeps opening high-return stores, holds comps in the guided low-to-mid single digits, and continues the margin expansion of the 2.0 program, in which case the growth methods are right and the premium is earned. It does not work if the consumer weakens, tariffs and cost inflation compress the thin margin, or the strong recent comps prove to be a cyclical peak rather than a run rate. At 49 times operating income with a ten-year implied horizon, the price already assumes the favorable decade, and the static methods that sit near half the price are the measure of how little supports it if execution slips.

Catalysts

The latest catalyst was a first-quarter fiscal 2026 beat and guidance raise. Net sales rose 14% to $2.85 billion, comparable store sales rose 6% ahead of internal expectations, adjusted EPS climbed 26% to $2.10, and gross margin expanded 30 basis points to 44.1% on better merchandise margins and lower freight. (tickeron, Motley Fool) Management raised full-year guidance to 9% to 11% sales growth, 2% to 4% comparable store sales growth, and adjusted EPS of $11.45 to $11.80.

Store growth and the elevation strategy are the structural catalysts. Burlington plans roughly 135 gross and 115 net new stores in 2026, ahead of prior guidance, and is rolling out its Burlington 2.0 and Store Experience 2.0 initiatives to upgrade merchandising, layout, and the in-store experience to lift traffic and ticket. (Simply Wall St) The off-price model also tends to gain share when consumers trade down, a tailwind in an uncertain spending environment.

Analyst sentiment is bullish, with a Buy consensus and recent target increases including JPMorgan to $374 at Overweight and UBS to $435 citing confidence in the Burlington 2.0 plan. (public.com) The things to watch over the coming quarters: whether comparable store sales hold up as they lap the strong recent base, the pace and productivity of new-store openings, the impact of tariffs on imported merchandise costs and of wage and fuel inflation on the thin operating margin, and whether the 2.0 elevation program keeps expanding gross margin.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive BURL report on boothcheck