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On Tuesday, UBS reiterated its Neutral rating on Buckle, Inc. (NYSE:BKE) shares, maintaining a price target of $40.00. The firm’s assessment highlighted Buckle’s solid growth history and potential for market share gains within the U.S. Specialty Retail sector. According to InvestingPro data, the company maintains impressive gross profit margins of 59% and a strong return on equity of 45%, supporting its market position. However, UBS expressed caution regarding the company’s earnings per share (EPS) outlook for fiscal year 2025 due to concerns about increased operating expenses and potential challenges from tariffs.
The analyst at UBS acknowledged that Buckle has shown strong comparable sales and gross margin percentages in recent quarters. InvestingPro analysis reveals that Buckle has maintained dividend payments for 23 consecutive years, with a current dividend yield of 9.48%. Nonetheless, the firm predicts that Buckle’s EPS will grow at a compound annual growth rate (CAGR) of 4% over the next four years. This anticipated growth, coupled with the substantial dividend yield, was cited as justification for a price-to-earnings (P/E) ratio of approximately 10 times.
UBS’s price target of $40 for Buckle’s stock is closely aligned with its current trading price, suggesting limited potential for near-term price appreciation. Furthermore, the firm indicated that it does not foresee any immediate catalysts that might lead to an expansion of the P/E ratio.
In their commentary, UBS pointed out that while Buckle presents some positive aspects, there are more attractive investment opportunities available within the Softlines sector. The lack of anticipated near-term catalysts and the presence of more compelling options in the market underpin UBS’s decision to maintain a Neutral stance on Buckle shares.
In other recent news, Buckle Inc. reported its first-quarter earnings for 2025, surpassing Wall Street expectations with an earnings per share (EPS) of $0.70, above the forecasted $0.66. The company’s revenue increased by 3.7% year-over-year, reaching $272.1 million, driven by strong performance in its women’s business segment, which now represents 50% of total sales. Despite these positive financial results, Buckle’s stock experienced a decline, reflecting investor caution due to concerns over tariffs and operational margin pressures. The company’s operating margin slightly decreased to 16%, down from 16.2% the previous year. Analysts from UBS Research noted Buckle’s strategic management of tariffs through vendor relationships and highlighted the company’s focus on expanding its private label offerings. Additionally, Buckle plans to enhance its retail presence by opening new stores and remodeling existing ones. The men’s segment saw a slight decline in sales, while the company continues to address increased selling, general, and administrative expenses. Buckle’s executives remain optimistic about the growth in private labels and the strong momentum in their women’s denim category.
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