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Buckle (BKE) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Buckle ( BKE) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Buckle as such a stock due to the following factors:

  • BKE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.2 million.
  • BKE has traded 126,262 shares today.
  • BKE traded in a range 237% of the normal price range with a price range of $2.78.
  • BKE traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in BKE with the Ticky from Trade-Ideas. See the FREE profile for BKE NOW at Trade-Ideas

More details on BKE:

The Buckle, Inc. operates as a retailer of casual apparel, footwear, and accessories for young men and women in the continental United States. It markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear. The stock currently has a dividend yield of 1.9%. BKE has a PE ratio of 13.4. Currently there are no analysts that rate Buckle a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Buckle has been 335,500 shares per day over the past 30 days. Buckle has a market cap of $2.2 billion and is part of the services sector and retail industry. The stock has a beta of 1.49 and a short float of 31.3% with 14.75 days to cover. Shares are down 13.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Buckle as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • BKE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, BKE has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for BUCKLE INC is rather high; currently it is at 50.17%. Regardless of BKE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BKE's net profit margin of 17.49% significantly outperformed against the industry.
  • BUCKLE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BUCKLE INC reported lower earnings of $3.38 versus $3.44 in the prior year. This year, the market expects an improvement in earnings ($3.49 versus $3.38).
  • BKE, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, BUCKLE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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