Why I Love Buckle and You Should Too!

Brett is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Disclaimer: I have a large amount of my personal net-worth in The Buckle (NYSE: BKE), so I want you to fall in love with them just like me.

Second disclaimer: My fashion sense is terrible.  My girlfriend told me; “all I want for Christmas is for you to go clothes shopping.”

Since I’m not qualified to speak on Buckle’s “hip-ness”, let’s get straight to the great business and financials.

1) No Debt

Buckle carries essentially no debt.  They’ve expanded slowly and strategically using cash-on-hand (and not by issuing new shares of stock).

2) Dividends!

They return excess cash to shareholders.  Over the last 5 years The Buckle has earned $17.46 per share, and they’ve paid out $16.98 in quarterly and special-dividends.  They’ve paid a special-dividend every year for 5 years straight.

3) Returns Baby!

If you bought Buckle stock Jan. 7, 2008 the share price was $13.76.  Jan. 7, 2013 the share price was $44.50.  That’s a 223% gain!  It gets even better, add in $16.98 in dividend payments and it actually works out to a 509% 5-year total return!  509% isn't bad for a boring mid-western retailer.  Heck, fancy-pants Abercrombie (NYSE: ANF) actually lost money over this same 5-year time frame (that’s including Abercrombie’s dividends).

4) Large Insider Ownership

The founder Daniel Hirschfeld owns 16.2 million shares (about $700 million worth…..do you figure he wants the stock to do well?).  The CEO Dennis Nelson owns 2.8 million shares.  Together they own about 40% of the company.  Dennis started as a sales clerk in 1970, and Daniel founded the company.  Their interest and the shareholder’s interest are in perfect alignment.

5) Good to Go.  Good to Grow.

Currently there are only 433 Buckle stores in 43 states.  They have almost no presence in the Northeast.  Also, Canada could easily hold future growth potential.

6) The Opposite of Garth Brook’s Song, “I’ve Got Friends in Low Places”

I did a little project where I plotted their stores, relative to the unemployment-rate by state.  Long story short, they are heavily concentrated in good states.  They have their largest number of stores in Texas (more than double any other state store count), and they are heavy in Nebraska, Kansas, Iowa, Colorado, Indiana, Ohio, etc.

7) Great shareholder report

Seriously, just go online and read it for yourself:

http://www.buckle.com/static/pdf/2011_annual_report.pdf

8) Not over-priced

The stock’s P/E is 13.4 (that's basically a 7.5% earnings yield).  7.5% when a CD is paying 0.3% sounds pretty good!  Said another way, BUCKLE IS EARNING 25 TIMES CURRENT CD RATES!...WITH VIRTUALLY NO CHANCE OF GOING BANKRUPT (you can't go bankrupt when you don't have debt).

9) Happy-ish Employees

Users on glassdoor.com (take it with a grain of salt) rank Buckle up there with the best places to work.  Though they are below Costco in employee satisfaction; they are above Lucky jeans and many of their fellow mall tenants.

Summary

This is a solid and shareholder friendly company.  I own shares and believe you should too!

 

 

 


Bmayo32 owns shares of The Buckle. The Motley Fool recommends The Buckle. The Motley Fool owns shares of The Buckle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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