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

In the published model solve dated 2026-Q2, anchored at $265.33, BURLINGTON STORES, INC. (BURL) is priced for +19.6% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/BURL

Headline

What The Price Assumes (Inversion)

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

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: n/a

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based land below the price.

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.

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

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.9%); the inversion above states its own rate.

Per-Model Detail (n=14)

Solvency

Bullet Takeaways

• Burlington is a unit-growth story before it is a retail story: the plan is "opening at least 100 net new stores per year and striving to exceed that, which we believe will allow us to operate 2,000 stores over the long-term", in 25,000 square foot strip-mall boxes.
• The supply side is the specific fragility, because the company has "no long-term purchase contracts with any of our vendors and, therefore, have no contractual assurances of continued supply, pricing or access to products", which means the merchandise depends on other retailers ordering badly.
• Second-quarter results are due on 27 August 2026, following a first quarter that produced $2.85 billion of revenue, 14% sales growth and 6% comparable-store growth.

Bull Case

The moat is not a brand. Shoppers do not walk into Burlington because they trust Burlington; they walk in because the coat costs less than it does at the department store down the road. What protects that is a buying organisation with the scale to absorb whatever the apparel supply chain has left over, and a store format cheap enough that the arithmetic still works at a lower price point. Neither is glamorous, and neither is easy to copy at speed.

Look at what the format actually is. The stated plan is "prioritizing 25,000 square foot stores located in busy, convenient strip malls", opening at least 100 net new stores a year toward a long-term target of 2,000. In the quarter ended 2 May 2026 the company opened 40 new stores, six of them relocations, and closed four. A smaller box in a strip mall carries lower rent per square foot than a mall anchor and is easier to fill with a shifting assortment. It is also easier to open. Growth that comes from replicating a proven unit is a fundamentally more reliable kind of growth than growth that has to come from getting more out of the units you already have.

The financial signature of that model is a high return on a small equity base. Return on equity runs near 34%, on book value of about $28.63 a share. That combination is what it looks like when a business earns real money without owning much: leased stores, fast-turning inventory, and capital that recycles into the next hundred locations rather than sitting in property.

Cost control is holding while the top line moves. Selling, general and administrative expenses stayed at 34.7% of net sales in the first quarter of Fiscal 2026, unchanged from a year earlier, with "improvements in occupancy and product sourcing costs" offsetting higher incentive compensation. Sales grew 14% and comparable stores grew 6% over the same period. Holding the expense ratio flat through double-digit growth means the new stores are not being bought with margin.

The share the company is taking has an identifiable source. In the same comparison set, M reported revenue down 0.3% and KSS down 3.8%. Department-store apparel dollars are moving, and off-price is where they land. Management has also been on the right side of its own forecasts with unusual consistency: guidance has been raised on twenty separate occasions since 2014, against a single cut.

There is one more feature of the model that only shows up in bad markets. Off-price buyers do best when other retailers misjudge demand, because the excess inventory is the raw material. A soft apparel cycle that hurts a conventional retailer's margin tends to improve Burlington's buying, which is close to the only genuinely counter-cyclical mechanic left in mass-market retail.

Bear Case

The competition for the value shopper is arriving from three directions at once, and only one of them is another off-price chain. The 10-K describes the first: "competitors, including department stores, mass merchants and specialty apparel stores, have been offering brand-name merchandise at substantial markdowns". When a department store discounts a branded coat to clear it, the price gap Burlington sells on narrows without Burlington doing anything wrong. The second direction is the deep-discount format, where OLLI is compounding revenue at 16.7% on an 11.4% operating margin and DLTR at 9.4% on 8.8%, both chasing the same trade-down customer. The third is the two established off-price chains that dominate the category and buy from the same vendors, at greater scale, for the same closeout goods.

That last point is where the supply side becomes the real exposure. Burlington states plainly that it has "no long-term purchase contracts with any of our vendors and, therefore, have no contractual assurances of continued supply, pricing or access to products, and any vendor could change the terms upon which they sell to us or discontinue selling to us at any time." The business needs to buy "inventory sufficiently below conventional retail to maintain our pricing differential", and it warns directly that it may not achieve that. Read together, those two sentences say the moat depends on conditions the company does not control: how much inventory the industry over-orders, and how many buyers are competing for it.

The customer is also under strain. The latest quarterly filing notes that the U.S. retail industry "continues to face increased pressure on margins as overall challenging retail conditions have led consumers to be more value conscious" and that lower-to-moderate income shoppers face economic pressure from a higher cost of living. That is a tailwind for traffic and a headwind for basket size, and it is not obvious which one wins.

Set that against what the price requires. The market is paying about 50.5 times what the company earns before interest and tax, and holding that valuation intact takes roughly ten years of operating growth pinned at the ceiling the business can self-fund. The multiple sits at the very top of its peer distribution, well beyond the upper quartile, and it is high relative to Burlington's own recent record as well. Of comparable fast-growers, only around 14% sustained that kind of pace for a decade. Ten years is a long time to open a hundred stores annually without a single bad buying season, a saturated trade area or a competitor opening across the street.

The balance sheet looks light until the leases are counted, and for a retailer the leases are the balance sheet. Funded net borrowings run to about 1.30 billion dollars. Include the operating lease obligations that come with a store base being expanded by a hundred locations a year and the figure is closer to 5.26 billion. Every new store adds a fixed multi-year payment before it sells anything. Interest on the funded debt is covered about 7.8 times over, which is comfortable, but interest coverage is not the constraint here. The rent is.

Sensitivity is the quiet problem. Each percentage point of growth the company gives up adds roughly two years to how long the current price needs the story to run. A single soft year does not break the thesis. It moves the finish line by an amount most holders never priced.

Valuation

Ten years is the number worth holding on to. That is roughly how long today's price needs Burlington's operating profit to keep growing at the fastest rate the business can fund from its own cash flow, and it is the plainest statement available of what a buyer at $350.17 is actually underwriting. The multiple behind it is about 50.5 times what the company earns before interest and tax.

Two reference points say how demanding that is. Against the retail peer set, the multiple sits at the very top of the distribution, well beyond the upper quartile. Against the historical record of companies that have grown this fast, only about 14% sustained the pace for anything like a decade. Neither is a forecast. Together they describe a bet placed well out on the tail of what has happened before.

The methods used to triangulate the value line up accordingly. Only the forward cash-flow methods reach today's price, and even they only just clear it, with the price about 12% above their central estimate. Everything anchored on what exists today lands well below: the price sits about 50% above the peer-multiple methods' central estimate, more than twice the earnings-power methods', and close to three times the asset-value methods'. That is the shape of a durability premium, where the price is paid for years of compounding rather than for current earnings.

The asset reading is the one to discount most heavily, and for a specific reason rather than out of charity. Burlington leases its stores and turns its inventory fast, so book value is about $28.63 a share against a return on equity near 34%. A business that earns that much on that little book will always look expensive to a lens that measures value by what is on the balance sheet. The peer-multiple and earnings-power gaps are the more informative ones, and they are large.

Among the comparison set the differentiation is real. OLLI runs an 11.4% operating margin with revenue up 16.7%, DLTR 8.8% with revenue up 9.4%, DG 5.3% with revenue up 4.7%, while M and KSS are shrinking at -0.3% and -3.8%. Burlington's first quarter delivered 14% sales growth and 6% comparable-store growth, faster than any of them. The premium in the multiple is being paid for that gap, and the gap is genuine. The question the price forces is not whether Burlington is better than Macy's. It is whether it stays this much better for a decade.

Solvency is comfortable on the funded debt and heavier once the store base is properly accounted for. Interest on borrowings is covered about 7.8 times over, and the share count has drifted down roughly 1% a year since spring 2022, so buybacks are quietly running alongside the store programme. Funded net borrowings are about 1.30 billion dollars; counting the operating leases that a hundred new stores a year commit the company to, the obligation is nearer 5.26 billion. For a lease-financed retailer that second figure is the one that governs how a bad year actually feels.

Catalysts

Second-quarter results are scheduled for 27 August 2026. The quarter before it, reported on 28 May 2026, set a high bar: revenue of $2.85 billion, sales growth of 14% and comparable-store growth of 6%. Inside the same filing, selling, general and administrative expenses held at 34.7% of net sales, level with the prior year, so the growth arrived without visible cost leakage.

The store programme is the recurring event that moves the model. Burlington opened 40 new stores in the quarter ended 2 May 2026, six of them relocations, and closed four, against a stated plan of at least 100 net new stores a year on the way to a long-term base of 2,000. Each quarterly print is effectively a progress report on that count and on whether the new locations are productive rather than merely open.

The variable outside management's control is the health of the lower-to-moderate income shopper, which the latest quarterly filing names directly as under pressure from a higher cost of living. That cuts both ways for an off-price retailer: it pushes traffic toward value formats while capping what each visit is worth. Watching comparable-store growth split between transactions and basket size is the cleanest way to see which effect is winning.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• M (Macy's, Inc.)
• FY2025 10-K: …' s ever-changing environment. We conduct our retail merchandising business under highly competitive conditions. Although Macy's, Inc. is one of the nation's largest retailers, we have numerous and varied competitors at the national and local levels and digital competitors at the global level, including department…
• FY2025 10-K: …It is difficult to successfully predict the products and services our customers will demand. As customers expect a more personalized experience, our ability to collect, use and protect relevant customer data is important to our ability to effectively meet their expectations, but is subject to the impact of…
• KSS (KOHL'S CORP)
• FY2025 10-K: …to excel in their jobs and serve our customers. We are committed to the highest integrity standards and maintain a Code of Ethics to guide ethical decision-making for associates. As a company of integrity, we expect our associates to be honest and accountable. Our ethics training, which we require all associates to…
• FY2025 10-K: …of 50 basis points to last year. The increase in gross margin was driven by lower freight costs and strong inventory management as our receipts were down 5% to last year as we continue to benefit from operating with greater flexibility. This was partially offset by elevated shrink levels. Selling, General, and…
• DDS (DILLARD’S, INC.)
• FY2025 10-K: …and Internet and mail-order retailers. Although we are a large regional department store, some of our competitors are larger than us with greater financial resources and, as a result, may be able to devote greater resources to sourcing, promoting and selling their products. Additionally, we compete in certain markets…
• FY2025 10-K: …of net sales ​ 26.7 % ​ 25.4 % 24.4 % Cash flow provided by operations (in millions) ​ $ 714.1 ​ ​ $ 883.6 ​ $ 948.4 ​ Total retail store count at end of period ​ 272 ​ ​ 273 ​ 277 ​ Retail sales per square foot ​ $ 137 ​ ​ $ 143 ​ $ 146 ​ Retail stores sales trend ​ (2) % * (5) % ** 5 % Comparable retail store sales…
• TGT (TARGET CORPORATION)
• FY2025 10-K: …and Analysis of Financial Condition for 2023, as compared to 2022, is included in Part II, Item 7, MD&A to our Annual Report on Form 10-K for the year ended February 3, 2024 . Net Sales Net Sales includes Merchandise Sales and revenues from other sources, most notably advertising revenue and credit card…
• FY2025 10-K: …of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix, and transfer of sales to new stores makes further analysis of sales metrics infeasible. TD Bank Group offers credit to qualified guests through Target-branded credit cards: the Target Credit Card and the Target MasterCard Credit…
• DG (DOLLAR GENERAL CORP)
• FY2025 10-K: …service offerings, product sourcing and supply chain capacity, in-stock consistency, customer service, ease of shopping experience (including but not limited to various modes of shopping, including online alternatives and delivery), promotional activity, employees, and market share. We compete with discount stores…
• FY2025 10-K: …operate stores in many of the areas where we operate, and many of them engage in extensive advertising and marketing efforts. Our direct competitors include Family Dollar, Dollar Tree, and various local, independent operators, as well as Walmart, Target, Kroger, Aldi, Costco, Sams Club, BJ's Wholesale Club,…
• PSMT (PriceSmart, Inc.)
• FY2025 10-K: …as currency rate changes, changes in tax rates or in the methods used to calculate or collect taxes on our sales or income and other factors that can increase costs. We might not be able to adjust prices, operate more efficiently or increase our comparable store net sales in the future to a great enough extent to…
• FY2025 10-K: …retailers, including Walmart Inc. in Central America and Grupo Éxito in Colombia and Cencosud in South America. We have noted that certain retailers are making investments in upgrading their locations or opening new stores which may result in increased competition. Further, it is possible that other warehouse club…
• DLTR (DOLLAR TREE, INC.)
• FY2025 10-K: …operations and financial condition of our continuing operations. Overview We are a leading operator of more than 8,800 retail discount stores, as of February 1, 2025, offering merchandise predominantly at the opening price point of $1.25, with additional offerings at higher price points. Our net sales are derived…
• FY2025 10-K: …our prices, but our ability to do so may be limited with the result that we could see lower sales or reduced profitability. We expect competition to increase in the future. There are no significant economic barriers for others to enter our retail sector. We compete with discount stores and many other retailers,…
• OLLI (Ollie’s Bargain Outlet Holdings, Inc.)
• FY2025 10-K: …and other improvements in their competitive positions, as well as result in the provision of a wider variety of merchandise at competitive prices by these consolidated companies, which could have a material adverse effect our business, financial condition, and results of operations. We cannot guarantee that we will…
• FY2025 10-K: …strategy, we expect a significant portion of our sales growth will be attributable to non-comparable store sales. Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy. Gross Profit and Gross Margin Gross profit is equal to our net sales less our cost of sales.…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

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.