Is it too late to consider buying The Buckle, Inc. (NYSE:BKE)?

While The Buckle, Inc. (NYSE:BKE) may not be the largest stock by market cap, its share price has seen some significant price action over the past few months on the NYSE, rising to highs of $40.27 and dropping to lows of $35.51. Some share price action can give investors a better opportunity to enter the stock and potentially buy at a lower price. One question that needs to be answered is whether Buckle’s current price of $36.26 reflects the true value of the small-cap stock? Or is it currently undervalued, giving us an opportunity to buy? Let’s take a look at Buckle’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Buckle

Is Buckle still cheap?

Great news for investors: Buckle is still trading at a fairly cheap price according to our price multiple model, where we compare the company’s price-to-earnings ratio to the industry average. In this case, we used the price-to-earnings (PE) ratio since there is not enough information to reliably forecast the stock’s cash flows. We note that Buckle’s ratio of 8.53x is below its peer average of 15.47x, indicating that the stock is trading at a discount relative to the specialty retail industry. However, there may be another opportunity to buy again in the future. This is because Buckle’s beta (a measure of stock price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall more than the rest of the market, providing a prime buying opportunity.

What does the future look like for Buckle?

Future prospects are an important consideration when considering a stock to buy, especially if you are an investor looking for growth in your portfolio. While value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. However, with negative earnings growth of -5.8% expected over the next two years, near-term growth certainly does not seem to be a major factor in Buckle’s purchase decision. This certainty tilts the risk-reward balance toward higher risk.

What this means for you

Are you a shareholder? Although BKE’s stock price is currently below the industry’s price-to-earnings ratio, the unfavorable outlook for negative growth carries some risk. Consider whether you want to increase your portfolio’s exposure to BKE or whether diversifying to another stock might be a better decision for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on BKE for a while but are hesitant to take the plunge, we recommend doing some more research on the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks associated with negative growth prospects going forward.

So if you want to do some further research on this stock, it is essential to consider the risks it faces. To do this, you should learn about the 2 warning signs we spotted some with Buckle (including 1 that makes us a little uncomfortable).

If you’re no longer interested in Buckle, you can use our free platform to view our list of over 50 other stocks with high growth potential.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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