Burlington Stores Inc. (BURL) shares rose more than 15 percent after reporting better-than-expected second quarter financial results. Revenue rose 10.7 percent to $1.66 billion, beating consensus estimates by $20 million, and non-GAAP earnings came in at $1.36 per share, beating consensus estimates by 22 cents per share. Comparable-store sales also rose 3.8 percent.
While the company's gross margins were flat at 41.4 percent, adjusted-EBITDA margins rose ten basis points to 7.1 percent driven by a 30 basis point decrease in the SG&A expense rate to 26.6 percent. Adjusted EBITDA grew 12 percent to $170.33 million. Management expects these trends to continue with an 8.8 to 9.3 percent increase in FY 2019 net sales.
Loop Capital raised their price target on the stock from $200 to $215 following the second quarter financial results and better than expected third quarter guidance. Analyst Laura Champine pointed out that comparable-store sales growth of 3.8 percent was nearly double analyst expectations and offset concerns that the implied Q4 range was below consensus.
From a technical standpoint, the stock broke out from trend line resistance to fresh 52-week highs. The relative strength index (RSI) moved into overbought territory with a reading of 71.24, but the moving average convergence-divergence (MACD) experienced a bullish crossover that could signal more upside ahead. These indicators suggest that the stock could see some consolidation before an extended move higher.
Traders should watch for consolidation above trend line support at around $190. If the stock rebounds from those levels, traders could see a move to further highs before experiencing a reversal in trend. If the stock breaks down from those levels, traders could see a move toward trend line, pivot point and 50-day moving average support at around $175.
Chart courtesy of TrendSpider.com. Author holds no position in the stock(s) mentioned except through passively managed index funds.