| BUSINESSWEEK
ONLINE : AUGUST
10, 1998 ISSUE | ||||||||
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| INSIDE WALL STREET
All Buttoned Up At Burlington Burlington Coat Factory (BCF) isn't exactly retailing's Rodney Dangerfield--who gets no respect. Burlington's stock has gained 43% this year, from 16 to 23 a share. But Bernard Sosnick of Genesis Merchant Group says Burlington is underpriced, compared with better-known peers: Over the past seven years, its earnings have risen at an annual rate of 14.3%--faster than rivals. Burlington, which has 254 stores and sales of nearly $2 billion, ''is creating a new image'' as it diversifies without giving up dominance in outerwear, says Sosnick. Nordstrom (NOBE) earnings have disappointed investors during the 1990s, he notes. Yet its stock sells at a price-earnings ratio of 23, vs. Burlington's 13. The Burlington p-e is also lower than J.C. Penney's (JCP), even though Burlington has a better earnings record. In sum, Sosnick thinks Burlington is worth at least 30 a share or a p-e of 19, based on estimated earnings of $1.55 for the year ending June 30, 1999, and $1.85 in 2000. Burlington has been granted ''anchor'' unit status in shopping centers and malls, so it plans to add footage at a yearly rate of 8% to 10%, says Sosnick. It also plans to relocate, expand, or remodel 40% of its stores over the next three years. Burlington has avoided cyclicity, he says, by adding men's suits, women's apparel, and juvenile furniture to its product line.
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